Don Farrell (SA, Australian Labor Party, Parliamentary Secretary for Sustainability and Urban Water) Share this | Link to this | Hansard source

I table five revised explanatory memoranda relating to the bills and I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

SHIPPING REFORM (TAX INCENTIVES) ACT 2012

The tax reforms are a major component of the government's Stronger Shipping for a Stronger Economy legislative reforms to revitalise the Australian shipping industry.

The purpose of the government's tax reforms is to encourage and support capital investment.

Changes made in 1996 by the previous government have meant a lack of investment in Australia's fleet.

A consequence of this lack of investment, in addition to the slow decline in the number of registered vessels, is that our ships are getting older.

The average age of the Australian fleet now sits at almost 20 years which is around eight years older than those in the world fleet.

Ironically, this imbalance exists despite Australia being a country that prides itself on the safety and environmental outcomes of our shipping.

In addition to being a brake on improving the productivity of our domestic shipping industry; newer vessels are safer, more energy efficient and better meet the needs of modern shipping.

Encouraging new investment is critical if we are to revitalise the industry.

The tax reforms I am introducing today provide a platform for this investment.

The tax reforms comprise two bills:

This bill provides for the issue of certificates after the end of the financial year to companies who meet the requirements of the tax concession regime.

It also provides companies applying for these concessions for the first time the opportunity to obtain a 'notice' during the first year of entry.

This will give companies a degree of certainty that their proposed arrangements will meet the requirements of the Shipping Reform (Tax Incentives) Bill 2012.

Additional requirements will apply to companies accessing the income tax exemption.

Companies will need to demonstrate that they have a substantial proportion of commercial, technical or strategic operations as well as crew management based in Australia.

Companies will also be required to comply with a mandatory training requirement.

The details of this training requirement, which are currently being finalised by the Maritime Workforce Development Forum, will be contained in regulations.

These provisions are aimed at ensuring beneficiaries of this best-in-class tax concessions have a tangible connection to Australia and are committed to building the local maritime industry.

The bill also provides the power to collect and collate data in relation to these reforms.

Powers to review decision are also provided for.

SHIPPING REGISTRATION AMENDMENT (AUSTRALIAN INTERNATIONAL SHIPPING REGISTER) BILL 2012

Australia's burgeoning commodity trade provides us with a once in a generation opportunity to become part of the international shipping trade.

This bill, the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012, will provide the vehicle to achieve this.

Currently, we have only four Australian flagged vessels participating solely in the international trade.

We need to move up the value chain – not only do we want to mine the iron ore for the world; we should be transporting it to the world as well.

Over the last 20 years, international registers have been embraced by many advanced countries, which, like Australia, have seen a large portion of their fleet register off shore.

International registers offer some of the benefits of open registers, such as the ability to use crew of different nationalities, while ensuring that the ship owner maintains a strong link to the country of registration.

These are not flags of convenience.

All companies with vessels on the international register will need to demonstrate strong links to Australia, ensuring that our maritime safety regulator, Australian Maritime Safety Authority (AMSA) has the regulatory reach to ensure compliance with our high safety, environmental and occupational health and safety standards.

Consistent with this, the primary objectives of this reform are to:

The bill establishes two shipping registers—the general and international registers.

Unlike the general register, AMSA will have the discretion to register a vessel on the international register and will have the power to cancel registration.

The bill sets out a range of matters that the registrar may have regard to when making a decision to register a vessel.

This decision is reviewable.

This discretion is important to ensure that we maintain a quality flag.

The crewing and labour provisions are a key element of this bill and go to the core of its competitiveness.

Before I outline these provisions, I would like to thank those in the labour movement who have worked with us on these provisions.

This reform package is not pro-union, it is not pro-business; it is pro-Australian.

Both employers and unions alike have worked constructively with the government to ensure that these reforms are world's best practice and offer the industry the best chance to compete on a level playing field with international shipping.

Mixed Crewing

The bill provides for mixed crews on Australian international register vessels.

However, international register vessels will be required to employ a minimum of two Australian crew members; preferably the master and the chief engineer.

One of the benefits of mixed crewing will be the employment opportunities for seafarers in the Pacific region and I know that the MUA is working hard on these regional partnerships.

Employment Conditions

To ensure that the international register is competitive, crews will be employed on international terms and conditions while engaged in international trading.

These employment conditions are in accordance with the Maritime Labour Convention (MLC).

Minimum wages and a number of conditions are set out in the bill.

Unless specifically amended in this bill, the provisions of chapter 2 in the Navigation Act 1912 will also apply to these seafarers.

This creates a safety net.

The bill provides for collective agreements to be negotiated through a seafarers' bargaining unit (SBU).

A collective agreement agreed with the SBU will be required for registration in the international register.

The bill also ensures that seafarers who suffer long term injury or death are adequately compensated.

The bill requires that ship owners hold insurance cover that provides for the level of compensation set out in the International Transport Workers' Federation Uniform Total Crew Cost Collective Agreement.

AMSA will have additional powers to ensure vessels comply with the working, living and crewing condition provisions contained in this bill.

A civil penalty and infringement notice regime is also established under the bill.

These measures are important to ensure there is no derogation of standards.

Participation in the Coastal Trade

Greater involvement by Australian companies in international trade will provide the catalyst to reinvigorate our domestic trades.

Consistent with this, vessels registered in the international register will have limited access to the coastal trade.

Operating under temporary licences, these vessels can compete with foreign flagged vessels in the coastal trade.

As I have already made clear, the Fair Work Act 2009 will apply to vessels operating under temporary licences.

To ensure our ships are on a level playing field with foreign flagged vessels, the Seafarers Rehabilitation and Compensation Act 1992 will not apply to international register vessels.

I know there is some concern that some coastal trading vessels may seek to avoid their legal responsibilities by joining the international register.

This will not happen.

The bill includes a requirement that vessels must be predominantly engaged in international trading.

Registration can be cancelled if this requirement ceases to be met.

COASTAL TRADING (REVITALISING AUSTRALIAN SHIPPING) BILL 2012

It is with great pride that I introduce the Coastal Trading (Revitalising Australian Shipping) Bill 2012.

We are in the middle of a once in a generation resources boom.

Yet only one half of one per cent of that trade is carried by Australian flagged vessels.

In the past decade the Australian fleet has gone from 55 ships to 21 with only four operating on international routes.

Our ports manage ten per cent of the world's entire sea trade.

$200 billion worth of cargo is moved annually.

In a country where 99.9 per cent of our trade is moved by ships, there will soon be no fleet to revitalise.

We need to act now or we won't have an industry left at all.

This is the first of five bills that comprise the government's Stronger Shipping for a Stronger Economy legislative reforms to revitalise the Australian shipping industry.

This package is an integrated suite of reforms which address fiscal, regulatory and workforce aspects of our nation's shipping industry.

This is the most far reaching overhaul of the Australian shipping industry since 1912.

These reforms level the playing field and provide the industry with a stable fiscal and regulatory regime to encourage investment and promote our international competitiveness.

Like many industries, Australian shipping is at a critical juncture in its ability to continue to be viable.

The irony of the industry's situation is that it is set against the backdrop of major global change, of which Australia is a major beneficiary.

The double digit growth of China and India, as well as other developing economies has driven demand for our resources.

The lack of an Australian shipping industry that can compete in the international marketplace is a lost national opportunity.

There are a number of reasons why Australian shipping has been declining; most of them have directly resulted from policy decisions made by the previous government.

Due to being so far behind our international competitors in terms of fiscal incentives the last decade or more has seen almost no investment in Australian ships.

One of the consequences of this lack of investment is that the average age of the Australian fleet now sits at almost 20 years against the global average of 12 years.

The age of our fleet has implications for the industry's productivity and environmental performance.

Modern vessels incorporate new technology delivering greater efficiencies.

Without new investment in the fleet, Australian shipping will continue to lag behind world standards.

Falling productivity when compared to other modes has seen shipping's participation in the domestic freight task continue to decline.

But it is not just the age of the fleet that is holding us back.

Like many industries, the maritime sector is also feeling the pressures of an ageing workforce.

We must attract new recruits; but we also need to have enough ships so that cadets can gain the required sea time to obtain their qualifications.

In the absence of a domestic shipping capacity we will be unable to train our own seafarers and will be reliant on the international market place to provide us with our maritime safety and environmental regulators.

This government believes that there are compelling economic, environmental and national security reasons to support revitalisation of the Australian shipping industry.

This belief is at the heart of the Gillard government's Stronger Shipping for a Stronger Economy vision.

Let me turn now to the main elements of the Coastal Trading (Revitalisation of Australian Shipping) Bill 2012.

The bill aims to:

I previously stated that this bill is the most significant overhaul of our coastal trading arrangements since they were introduced early last century.

Back in 1912 when those provisions were debated in the House the role of British-owned shipping companies in the Australian coastal trade was the subject of much discussion.

100 years later, the debate has moved on.

We have one of the most liberal coastal trading regimes in the world.

Unlike America, Canada or various EU countries, Australia recognises that there is a legitimate role for foreign flagged vessels in our domestic shipping industry.

Under the provisions of this bill this will not change.

Nothing in this package of bills closes our coast.

However, we are making transparent the decision making processes, which determine a foreign vessel's participation in Australian domestic shipping.

In support of this, a new three tier licensing system will replace the antiquated system of licences and permits:

In creating a temporary licence we are moving away from the current system where companies apply on a permit by permit basis

However, we have maintained the flexibility provided by the permit system, through the creation of a licence variation process.

Temporary licence holders will be able to vary their licence to increase the number of voyages that will be undertaken or to vary the details of those voyages that have already been authorised.

General licence holders will have the opportunity to nominate for these voyages.

Again, this will be an open and transparent decision making process.

The bill provides for enhanced merits review of decisions, including recourse to the Administrative Appeals Tribunal on a range of matters.

It also provides enhanced penalty provisions that modernise and provide greater scope for action if there are attempts to undermine the objectives of the system.

Transparency is a cornerstone of this new model and the bill provides for strengthened reporting and publishing arrangements, to enable all industry participants to better understand the shipping market and to support more informed decision making.

Commercially sensitive information will not be released.

There has been some debate regarding the industrial arrangements for vessels engaged in the domestic coastal trade.

This government made the decision in 2009 that vessels operating in the coastal trade will be subject to the provisions of the Fair Work Act.

This was implemented through the Fair Work Act Regulations 2010.

It is this government's policy that this scope of coverage will not change.

These vessels are operating in the domestic economy and these seafarers are entitled to be paid Australian wages.

This bill is the key to the regulatory framework – a framework that supports Australian coastal shipping, while allowing for the participation of foreign vessels.

It is a framework that will enhance our participation in international trade and underpin the Australian industry with generous tax concessions that level the playing field between Australian shipping and its international competitors.

However, a ship is only as good as its crew.

That is why a key element of the government's reform package is workforce development.

We must attract, train and retain a skilled seafaring workforce.

There will be no incentive to invest without the right people in the right jobs.

There are challenges of an ageing workforce, costly and complicated training systems and the consequent erosion of skills.

This was strongly identified by the parliamentary inquiry into coastal shipping.

The government has already been doing its bit in this area and I believe industry must also ramp up its efforts in resolving the skills lag.

To encourage this on 1 January 2012 I established the Maritime Workforce Development Forum with experienced people from industry, unions and the training sector.

It is chaired by the former Public Service Commissioner Ms Lynelle Briggs.

The forum is addressing areas that are fundamental to building our skills base.

These will include a workforce plan for the medium term to address issues including the ageing workforce and the most immediate skills gaps.

The forum will be in place for no more than five years and I will review its effectiveness within two years.

The final element of the reform package is labour productivity.

We are committed to aligning Australian productivity practices with the best in the world.

To do this, we will need a compact between industry and unions.

This compact must include changes to work practices, a review of safe manning levels and the use of riding gangs on coastal vessels.

This compact is essential to the reform agenda.

Negotiations between industry and the unions are progressing.

Before I close, I would like to thank those in the industry who share our vision for a revitalised Australian shipping industry – the ship owners, unions and shippers who have worked constructively with the government since 2007 to develop this package.

This package of legislation is the product of a long and thorough process of consultation and review.

Starting first with a comprehensive review by the House of Representatives committee, who delivered a bipartisan report recommending a policy framework to revitalise the shipping industry.

In 2009, I convened the Shipping Policy Advisory Group comprising shippers, industry and unions to advise me on how best to implement these recommendations.

In 2010, fulfilling our election commitment a discussion paper was released seeking public comment on the proposed reforms.

In 2011, I established three industry reference groups to work through the detail of the reforms. Again, these groups comprised a cross-section of industry.

We involved representatives from across government, with Treasury chairing the fiscal group.

Exposure drafts of all the bills were released for public comment and a further roundtable was held in February to enable industry to work through the details with officials.

I thank those officials for their leadership and assistance in shaping the final tax package that is being introduced today.

The commitment and cooperation demonstrated by those who participated in this process is a credit to the industry and I thank them for their efforts.

COASTAL TRADING (REVITALISING AUSTRALIAN SHIPPING) (CONSEQUENTIAL AMENDMENTS AND TRANSITIONAL PROVISIONS) BILL 2012

The Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012 will ensure that there is a smooth transition from the current coastal trading arrangements to the new regulatory regime.

I would like to turn first to the proposed transitional general licence, which has been the subject of some public commentary.

Transitional General Licen c e

Under this bill, a transitional general licence will be created to enable foreign flagged vessels currently operating in the Australian coastal trade under a licence, to continue their operations.

These vessels are currently licensed under part VI of the Navigation Act 1912.

This provision recognises that operators of foreign flagged vessels may not be able to immediately transfer to the Australian register.

This may be due to a range of financial, legal or other commercial constraints.

These vessels are performing an important function in the domestic shipping industry.

A transitional general licence will be valid for up to five years and may be renewed once for an additional five years.

Inclusion of this power for an additional renewal was in response to stakeholder feedback that indicated that a number of these vessels are locked into commercial agreements that go beyond the initial five years and cannot be re-negotiated without considerable financial penalty.

Proof of these commercial arrangements will be required to support an application for renewal of a transitional general licence.

In the long term, if these operators wish to continue to have unrestricted access to the Australian coast, they have to register their vessels in the Australian General Shipping Register.

Vessels operating under a transitional general licence will be required to pay wages consistent with the current obligations under the Fair Work Act for vessels operating under licences issued under the Navigation Act.

There will be no increase in the wages payable.

Foreign flagged vessels currently operating under permits will not be allowed to apply for transitional general licences.

Four month transition period

To minimise disruption as we move from the old to the new system, this bill provides that permits or licences, which are valid immediately before commencement of this bill will continue to be in force until their expiry date or up to four months after 1 July 2012.

Any application submitted on or before 30 June, which was not decided by 1 July 2012, will be assessed in accordance with the Navigation Act requirements.

These will be valid for up to a maximum of three months.

These arrangements will provide industry with a level of certainty as we move to the new system.

Occupational Health and Safety and Workers' Compensation

Consistent with current arrangements, the Occupational Health and Safety (Maritime Industry) Act 1993 will continue to apply to vessels operating under a general licence and foreign vessels operating under a transitional general licence.

This act will also apply to all vessels registered in the Australian International Shipping Register (AISR) irrespective of where these vessels are located.

This is to ensure that AISR vessels maintain high standards of safety.

The Seafarers Rehabilitation and Compensation Act 1992 will not apply to vessels registered in the Australian International Shipping Register when these vessels are operating under a temporary licence.

This will enable AISR vessels to operate on a competitive footing with foreign flagged vessels while engaging in the coastal trade.

A number of consequential amendments are required to existing Commonwealth laws to prevent any potential gaps in these laws as we repeal certain parts of the Navigation Act.

Minor amendments will also be made to the Australian Maritime Safety Act 1990 to ensure that AMSA is able to share information with Department of Infrastructure and Transport for the administration and enforcement of the requirements of the new legislation on coastal trading.

TAX LAWS AMENDMENT (SHIPPING REFORM) BILL 2012

The purpose of the government's tax reforms is to encourage and support capital investment.

The Tax Laws Amendment (Shipping Reform) Bill 2012 delivers a best-in-class internationally competitive tax reform package.

The tax concessions contained in this bill aim to address the cost disadvantages faced by Australian ship owners and encourage renewal of the ageing Australian fleet.

The bill provides:

These concessions are available to companies that satisfy the qualifying conditions and hold a valid certificate, as set out in the Shipping Reform (Tax Incentives) Bill 2012.

Turning to each of these concessions:

Exemption from income tax for ship operators

International experience in Europe, Asia and South America shows that the introduction of financial support—usually in the form of a tonnage tax and personal tax breaks for seafarers working in the international trade—has had substantial and very positive effects.

The bill I introduce today goes a step further—the government is not introducing a new tax in the form of a tonnage tax—instead it exempts qualifying income from shipping from taxation.

The effect of this provision is that Australian resident companies with vessels registered in Australia, including those on the international register, will not pay company tax.

Furthermore, a generous approach is taken to defining these activities that generate eligible shipping income.

Accelerated depreciation

This bill provides ship owners with an accelerated rate of depreciation for their ships.

When introducing the previous bill, I mentioned before Australia has an old fleet compared to international standards.

This is in part due to our depreciation rate for vessels being set at 20 years.

This bill cuts that rate in half.

The new depreciation rate will be 10 years.

This provision has multiple effects.

An economic benefit—the cost of operating a 20 year old large bulk carrier is at least 40 percent more than for a five year old ship.

A safety and environmental benefit—newer vessels incorporate new technology making them safer and more environmentally friendly.

An employment benefit as ship building is encouraged.

Roll over relief

The rollover relief concession provides that if a ship is disposed of, ship owners will be able to defer tax due on a balancing adjustment amount by two years.

If a replacement ship is purchased by the end of the two years, the balancing adjustment will be rolled over.

Combined with the accelerated depreciation concession, ship owners will have a greater incentive to invest in more modern and efficient ships.

Refundable Tax Offset

It makes no sense that an Australian seafarer working on a ship in the Port of London should pay Australian income tax while an Australian working as a bartender in a pub in London does not.

This creates a disincentive for hiring Australian seafarers.

Consequently, the bill provides for a refundable tax offset for employers of Australian resident seafarers.

The seafarer tax offset provides an incentive for a company to employ Australian seafarers on overseas voyages.

This will also provide Australian seafarers with the opportunity to develop their maritime skills on ships operating in international trade.

For an employer to qualify for the offset, the seafarer must have served on overseas voyages for at least 91 days in the income year on an eligible vessel.

Royalty Withholding Tax

Finally, payments made for the lease of shipping vessels from foreign resident lessors will be exempt from royalty withholding tax.

This exemption applies to payments made by Australian resident companies for the lease, on a bareboat basis, of qualifying vessels that are used commercially to ship cargo or passengers.

This element is aimed at reducing the costs for Australian shipping operators of securing vessels from overseas.

Together, these tax arrangements ensure investment in Australian shipping will continue.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

I rise to speak on a matter of immense importance to the Australian economy and in particular to the regional economy. Transport has always been crucial to Australia. We have the curse of being so far from many of the world's major markets—but maybe it is a blessing being so far from any of the world's major problems at the moment. However, this is an issue with transport, so if we want to compete on a global market then we must have globally competitive costs.

Whilst the success of our agriculture, mining, manufacturing and tourism industries cannot be faulted without an efficient and effective transport system, all their efforts will be for nothing if we cannot get the product to the purchaser. There is no point in growing wheat, barley or triticale if we cannot transport it to a market. There is no point in exploring for new reserves of iron ore, coal, rare earths or bauxite if we cannot get the shipping to take it to the ports near markets in South-East Asia. The question before us is not one between no transport network or some transport network but one about getting the most effective transport in place so that Australian industry can be encouraged and invigilated—and I love that word—by access to the world's best transport infrastructure at a reasonable price.

We have all seen the impact of the high Australian dollar on our exporting industries. We might be encouraged in some instances that the dollar is high because people are purchasing our products. It was a fortunate circumstance that we had South-East Asia to drag us through the global financial crisis with their purchase of coal and iron ore—obviously nothing to do with any crazy schemes of putting ceiling insulation in roofs or building school halls or absent-mindedly throwing out $900 cheques. But if we go to the actual structure of how we support our nation and to one of the fundamentals, which is transport cost, and start meddling in that in such way as to make our exports less competitive then we are really just having a shot at ourselves. It is the same as making our costs higher and less competitive. It makes it harder for Australian businesses to sell their products overseas. It is always a staple that we must understand that the only mechanism that really keeps the Australian economy going is those export based industries, predominantly based in regional Australia, that rely on the export of goods. In the whole GDP argument so often people misled by saying, 'Well, the majority of the GDP is in the crescent economy that exists between Melbourne, Sydney and Brisbane.' That might be the case, but the source of that wealth comes from regional Australia. Somebody has to put something on the table to make the money spin around. That person who puts something on the table must be able to get it onto a ship and export it to get those dollars into our nation to support the standard of living we expect.

  We are an island nation. Commodities rely on coastal shipping: 99 per cent of our exports travel by sea and only one per cent by air. In fact, 75 per cent of the value of our exports travel by sea and a large proportion of our interstate transport travels by sea. So we are really dealing with something that is fundamentally important to the fluid movement in the Australian economy.

We should apply this test to all transport bills that come before us: do these bills make it easier for our farmers, miners and manufacturers or do they make it harder for them and therefore increase the cost and their frustration? It is by this test that the coalition will oppose these bills. We oppose these bills because the government plans to introduce a complicated, convoluted and futile system which will frustrate the access to shipping for Australian business and thereby choke the business prospects of future opportunities. Because these bills do not meet our own objectives and are a threat to the competitiveness and vibrancy of our exporting industries, the coalition will move a second reading amendment that has been circulated in the chamber. This amendment says that we decline a second reading for these bills until the bills have been referred to the Productivity Commission for further consultation.

Australia has the sixth longest coastline of any nation in the world despite being only the world's 13th largest economy. We have the fourth largest shipping task in the world and shipping takes a quarter of Australian freight between the states. It is therefore fundamentally true that Australian businesses need access to the most affordable shipping we can provide to make them competitive. These bills will put into question whether we can achieve such an increase in shipping. If we cannot, that will put more pressure on our roads and more pressure on our rail network. It is quite obvious that, if we are not moving things by sea, we are going to have to sit behind a truck going down the Pacific Highway. We have also failed in other major tasks in this nation such as getting alternate transport corridors going such as inland rail, which is something that the Labor Party is always talking about, always announcing, but never building. Already we have 3,000 trucks a day going through a place such as Moree because of inadequate rail services. Coal is being transported along the roads of western Queensland. Trains, whilst leaving Fallon, the second-biggest grain receival depot in Queensland, have a maximum speed of 40 kilometres an hour. These are all signs of a government that has lost its way and has not invested in infrastructure, that is failing to take account of the fact that the times of prosperity that are currently seen in the Asian economy may not be there for an eternity, but our debt will be.

We see lately that the Indian economy is starting to plateau and we also see on the nightly news what is happening in Europe. We acknowledge that, if Europe falls out of bed, as the biggest economic bloc in the world and obviously the largest consumer of Chinese product, the Chinese demand for our commodities will peel off, and if the Chinese demand for our commodities peels off then the question we all have to ask ourselves is, how do we pay what is currently our $231 billion debt, how does Queensland pay what will be a $100 billion debt, how does New South Wales pay its debt, how does South Australia refloat its economy? All these questions are the realities of what is before us at the moment.

We have to be pragmatic and understand that we have to take the best advantages that are before us at the moment. We must take advantage of these global markets and we must make sure that we must remove whatever impediments exist between us getting that commodity out of the ground or off the paddock and into the market, not exacerbate them. This bill exacerbates them. I hear the Reserve Bank talking and the Prime Minister and the Treasurer talking about how we should have a spring in our step. I have been examining the spring in our step lately and I think it is Topy spring soles. We have at this point of time in our economy extreme concerns, especially in the commercial sectors, especially in small business, especially on the high street, where we are just not getting the trade we expected. The Labor Party's process of trying to fix this is to bring in a mining tax, that is find the person who is making some money and hit them over the head. What they should be doing is trying to make sure that a well-oiled economy gets that money flowing around by its own natural means. One of the ways to do that is by having an effective transport system, an efficient transport system.

The Labor Party's logic is completely counterintuitive. They are creating another impediment on our coastal shipping, they have failed to invest in our internal transport corridors, they are creating unnecessary impediments in such things as development of the Galilee Basin by disappearing overnight a la the live cattle trade debacle approach and throwing sand in the wheels of trying to get another export market going and trying to take advantage of the prices that we are currently seeing in South-East Asia. We have seen the Labor Party stand up and all of a sudden turn most of the Coral Sea into a marine park. This is not a sign of a government that seems to be watching the news at night and trying to work out what on earth is happening around the world. This is a government that is completely distracted. We have Minister Burke crying in his beer because he cannot go to Rio tomorrow. There are probably other things at home you should be talking about, Minister Burke. You should be explaining to us what on earth you are doing shutting down large sections of the Queensland fishing industry, creating yet another impediment; why you are creating these impediments on the export of coal; why you are so negative. They always complain that we say no, but what they do is say no to future prosperity and completely ignore what is happening on the television at night. These bills will establish a second register of Australian ships, to be known as the Australian International Shipping Register. Ships will be able to join this register provided they meet the eligibility criteria, including the requirement to have two senior Australian officers on board. These bills will help respond to the critical skills shortage that exists in the Australian shipping industry.

Whilst the coalition supports these changes, the bills have some concerning flaws that may be the result of an inadequate consultation process. Despite these bills being very complex, the consultation period for the draft legislation was open for only a few weeks. Once the bills were introduced, they included new provisions not previously contemplated. Unfortunately, despite some positive changes in these bills, because of these flaws the coalition remains unconvinced that these changes will see a significant increase in the number of Australian flagged vessels operating on our coast. This is not just the position of the coalition; it is supported by industry as well. For example, Shipping Australia stated in its submission that some of the provisions, at least in the Coastal Trading (Revitalising Australian Shipping) Bill 2012, are confusing and 'in our view require substantial amendment to meet what we understand to be the objects of the bill'. Tom Pinder, from Australian Coastal Shipping said:

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.

A continuation down the path of a one size fits all [policy] will 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—

Which the Labor Party seems to bang on about all the time. You are going to have to explain to every family on holidays that has a truck sitting in front of them with a container on the back that it could have been going by sea. It is not going by sea because, in their wisdom, the Labor Party has decided to make moving stuff by sea harder. So where else will they go? They will go down an inadequate rail network. An adequate inland transport corridor has just never been built by the Labor Party, and the roads are chock-a-block and are being torn to pieces, especially after the floods. Or they will go down the Pacific Highway, in amongst mum and dad and the kids going on their holidays. It is peculiar, but you get used to that hanging around with this crowd.

Even the department of transport itself is not promising that these bills will lead to an increase in the number of ships. The Australian Logistics Council has raised questions about how many ships this package would actually see come onto the register. The department said in its reply that it is 'not appropriate to speculate on how many will take advantage of this new legislation'. So there is no guarantee that these bills will increase the number of Australian ships, and there is no doubt that these bills will increase red tape and costs for those using Australian shipping.

One bill in this set, the Coastal Trading (Revitalising Australian Shipping) Bill 2012 abolishes part VI of the Navigation Act 1912 and, hence, abolishes the current permit and licensing system. These bills will lace that system with a three tiered licensing system: (1) a general licence which provides unrestricted access for Australian registered vessels crewed by Australians, permanent residents or foreigners with appropriate work visas to engage in coastal trading in Australian waters for a maximum of five years; (2) a temporary licence which provides limited access to engage in coastal trading for foreign flagged vessels or Australian international second register vessels for a 12-month period for specifically identified voyages; and (3) an emergency licence which provides extremely limited access in identified emergency situations such as natural disasters.

This three tiered system will create obvious difficulties. The new temporary licence category will only be issued where, according to the explanatory memorandum, 'those voyages where the required information is known, including expected loading dates, loading and discharge ports and cargo types and volumes'.

Remember these temporary licences are issued for a 12-month period. How can a user of shipping provide information on their expected loading dates 12 months in advance? Let us do an experiment on this. How many people in this chamber could tell us exactly where they are going in the next 12 months? How many politicians would like to submit a register for the next 12 months of exactly what flights they are going to catch and, if they go beyond that, provide a licence? This is obviously another form of bureaucracy that has passed the backbench of the Labor Party and, no doubt, had good oversight from Senator Doug Cameron, but it obviously has not passed anything that has to do with a reasonable expectation or understanding of the requirements for fluid movement of transport or to try to remove some of the impediments and red tape.

By doing this, we want to keep Australians in jobs. Let us keep the economy going and not the idea that you think you are going to create jobs by making things impossible. It just seems bizarre. It is another extension of the mad carbon tax idea. With the carbon tax they are going to cool the planet. Somehow, by putting up the price of power, it will keep people in work. No it will not. If you put up the price of power it will put people out of work. That is the only logical thing. You are putting people out of work by putting up the price of power and making life a misery for everybody who has to turn on the lights in their house and by shutting down the economy even further and putting more waste in the economy by saying that, even if you do manage to get something to the port, you are going to have an uncompetitive weight placed on you so that people exporting from Indonesia will have greater access to the market for coal than people exporting from Australia.

We have to understand that the global market, from all observations, looks like it is heading into a very uncertain time. We in this country should be doing everything in our power to realise that and to make sure that the mechanisms of commerce and the movement of things are as fluid as possible. We can protect our interests, but we do not protect our interests by winding back the clock and creating unnecessary impediments on the movement of Australian products from Australian fields and Australian mines. That is basically what this will do: it is just going to create an unnecessary overhead in the movement of Australian product. Noting that our major export is coal and our major sector is mining and that it is all moved by ship, we have to understand that this economy works on export dollars, on what you put on the ship.

Look at what people are wearing. This gentleman in front of me is wearing a shirt from China or somewhere and a suit that is pretty nice and could come from Italy or somewhere like that. The shoes are not from around here; they are from overseas. I do not know where the chair he is sitting on was made. Everything around us—including the computers—is made overseas. We live by the benefaction of things that come off a boat to us. Our cars predominantly come from overseas. Our fuel comes from overseas. The hotplate we cook on at night comes from overseas. I do not know where the lights are made but you would probably find they come from overseas. So everything is coming off a ship. If you do not believe it, think of your own household and think of where the things come from: they have come off a ship. So, if you are going to increase the cost of shipping, quite obviously you are going to increase your cost of living.

The only way we survive—and they do not send this for charity—is by somebody somewhere sticking something on a ship and sending it in the other direction. Who are these people that stick something on a ship and send it in the other direction? Let us face it: we have a manufacturing sector but it is not a large one, so we are sticking coal on a ship, we are sticking iron ore on a ship, we are sticking wheat on a ship, we are sticking barley on a ship and we were sticking cattle on a ship until they closed down the live-cattle trade.

All these things are the source of our wealth when that money turns. That is when that $20 turns up. That is when the five people at the table spin it and then the five people say, 'Well, the GDP of this table is now $100—five times $20.' But if that $20 had not turned up—so if that person who put the $20 on the table had not turned up—the GDP of that table would have been zero. And the person who puts that $20 on the table is regional Australia. Coal, iron ore, barley, sheep—that is where the money turns up from and then it spins around our nation's economy. But, if we are going to put in an impediment to that $20 turning up on the table, life for the rest of the people living off the table is going to become harder; it has to.

This is why we have to look at the practicalities of what these bills mean. We have got to make it as easy as possible for that 20 bucks to turn up at our table. We have got to make it as easy as possible for the exporting of coal so it makes it to its market and as easy as possible for the exporting of iron ore so it makes it to its market, and we have got to be time sensitive because these prices that we are getting at the market are peeling off and they are not going to stay up forever. If they peel off sufficiently enough our capacity to finance our debt and to finance the things that people have an expectation to receive—health services, education services, police services and defence services—will not be there.

When we look at these things and when we look at the legislation, we say at first glance, 'Oh well, it gets more Australians in the shipping industry jobs,' and I suppose it does, but that is very short term thinking because what it is going to do is make the system uncompetitive so everybody loses out. Caltex said in their submission that, given the variable nature of their operations, it was not possible—

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Order! Senator Joyce, your time has expired. Can I invite you to move your second reading amendment?

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Yes. I move:

Omit all words after “That”, substitute:

the Senate declines to give this bill and related bills a second reading until the bills have been referred to the Productivity Commission to:

(a) assess the Government's proposed “shipping reform package” for both international and coastal trades with reference to the current and historical arrangements;

(b) measure and discuss the economic and environmental impacts of reducing or increasing regulation of Australia's coastal shipping services to Australian manufacturing and industry dependent on coastal shipping services, the wider economy and Australia's coastal trading fleet, including passenger services;

(c) provide recommendations on policy options that would achieve the Government's objective for a viable, competitive shipping service in Australia for both coastal and international shipping that is in the national interest, lead to productivity gains and will not disaffect Australian manufacturing, industry and tourism;

and report on or before 31 December 2012.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Thank you, Senator Joyce.

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of this suite of reforms to the shipping and maritime legislation, reforms which have quite literally been about 100 years in the making. Australian shipping has been heading under over the past 10 years. Our merchant fleet has decreased by half, with the number of Australian-licensed trading vessels dropping from 55 in 1996 to 21 today. And only four of those vessels are operating on international routes. In a country where 99.9 per cent of our trade is moved by ships, there will soon be no fleet to revitalise. Australian seafarers' jobs are being lost as overseas-flagged ships take more of our goods from producer to market. In a country that has the fourth largest shipping task in the world, this Labor government has never been prepared to sit back and wave bon voyage.

This suite of bills provides the incentives to invest in shipping in Australia. It will get the Australian flag flying on ships again—ships carrying goods produced by Australian workers both to markets in Australia and to Singapore, Hong Kong and the other great ports of the world. It is simple: either we get on with the job of reforming the industry and of trying to find the right incentives to assist Australians in the shipping industry or the Australian shipping industry will disappear, and our producers will be left at the mercy of more overseas decision makers. This results in increased uncertainty for business owners and for the hardworking Australians they employ. There are no plans to restrict the number of foreign vessels in Australian waters; these reforms are about levelling the playing field for Australian ships so that they can better compete.

I begin with a quote from Teresa Lloyd, Executive Director of the Australian Shipowners Association, on the day this suite of bills passed the lower house:

"I just want to say that the shipowners are ready to invest and this is a great day in terms of a new era for Australian shipping.

It's been very difficult to compete for at least the last 15 years, and that's seen the industry shrink to an almost unsustainable level.

And today is a fantastic day and the shipowners are quite committed for their investment decisions and they're looking forward to expanding into new trades, into new international opportunities that have never been available to us before.

We think it's a fantastic thing and we thank the Minister for all his efforts to make it happen."

This quote hits at the chord of the goodwill between the parties involved in negotiating this suite of bills, from a committee inquiry in 2008, the establishment of a shipping advisory group in 2009 and the release of a discussion paper that shaped the path taken to get to where we are today. Specific groups were then established, one on taxation, chaired by Treasury, one on regulatory reform and one on workforce development. Another inquiry was conducted when the suite of bills came to the House of Representatives. It was a process that the Labor Party, the labour movement and the shipping industry were committed to getting right.

These groups took the opportunity—because, as I said earlier, this is the first time in 100 years that the Navigation Act 1912 has been comprehensively updated. They took their opportunity and were very flexible during negotiations, making sure that they did not put their own interests first, no doubt recognising that together we can rebuild the Australian shipping industry and that together we are stronger than if we are all fighting over the pieces of broken hull. It was a process that led to unanimous recommendations on this legislation from the bipartisan parliamentary committee, including its deputy chair, Nationals MP Paul Neville, which makes the amendment proposed by Senator Joyce unnecessary. The shipping industry thought that the conservatives in this place were onside. Unfortunately, the National Party is being forced by its big brother to ignore its very own policy statements and put politics and obstructionism ahead of the livelihoods of Australian seafarers and Australian shipowners. Labor is here to take the necessary steps to ensure that Australia has a sustainable shipping industry for the next 200 years and that young Australians who dream of a life at sea will be able to have one under Australian wages and conditions. It is about recognising what government can do to assist industry and working collaboratively to achieve it. We all want and deserve a strong shipping industry in this country. Just like we are exporting our minerals, we should be exporting our expertise in naval architecture, seafaring and engineering.

The Leader of the Nationals, Mr Truss, is on record opposing these changes out of a concocted fear that other industries would want the same concessions—as though no industry-specific policies were ever enacted by the Howard government. I am very proud to say that just a few months ago this Labor government, with the support of the Independents and the Greens, moved through both houses of this parliament to abolish what was one of the most disgusting Howard era industry-specific policies. While we on this side are about building capacity in Australia's workforce and providing incentives for Australian business, those opposite are fixated on stripping away working conditions, stripping away family payments and stripping away incentives to invest.

I will now step the Senate through four key points in the legislation that bring the internal battle of the National Party senators to the fore. The National Party policy platform seeks to 'introduce a tonnage tax to replace company tax on an opt-in basis'. This seems to be a reasonable step, without promising too much. One would suspect that, if the bills, on the recommendations from Treasury and industry, went further, the Nationals would be only too keen to lend their support. These bills before us today introduce a zero rate of taxation for Australian shipping companies to get the vessels sailing again.

The National Party platform also seeks to 'introduce a national system of training support' to 'replace the existing state based distribution of funds'. Well, guess what? The bipartisan committee supported this and it is reflected in the bills before us.

The platform continues by saying that the Nationals will:

The work has been done. The bipartisan committee supported the reforms, and the bills will remove the income tax burden on Australian seafarers operating internationally.

Finally, the suite of legislation provides for a second shipping register. This second register was, once again, a part of the Nationals Policy Platform 2011-12. I urge them to support it through supporting this legislation.

Labor recognise that at times we need special assistance for some industries of national significance. Today we are looking at the maritime industry. Just this year we have sought to create better conditions for truckies in the road transport industry, for outworkers in the textile industry and for all workers in the construction industry.

This legislation would not have come about without the tireless advocacy of the Maritime Union of Australia and its national secretary, Paddy Crumlin. I recognise all from the MUA for your work. As many of you are aware, I am based in Devonport, Tasmania, the home of the MUA's Tasmanian branch. Membership of the MUA in Tasmania centres on the key transport linking us with the mainland, the Spirit of Tasmania. The Spirit, as it is affectionately known in Devonport, employs around 200 seafarers based between Devonport and Melbourne, making it the biggest employer of seafarers in Australia. There were many cries of relief from members in Devonport, many of whom are third- or fourth-generation maritime workers.

Tasmanian exporters have been hit hard over the past year, with the closure of the only international shipping service out of the island. All freight now has to move through the Port of Melbourne, significantly increasing costs to exporters. Federal Labor has delivered a $20 million package to assist Tasmanian exporters and, importantly, to investigate freight logistics in the state. The funding package contains three key measures: direct and immediate assistance of $14.5 million to Tasmanian exporters through a one-off payment to help them stay competitive in the new shipping environment; investing $4 million in infrastructure improvements at the port of Burnie to increase container-handling capacity and enhance the movements within the port, thereby reducing the need for shunting and double-handling; and establishing a freight logistics coordination team with an industry leadership. These three practical measures address the complex issues facing Tasmanian exporters, as well as the shortcoming in the state's supply lines. Together, the measures support exporters in the short term through direct assistance and benefit the whole state in the long term through significant infrastructure upgrades.

Labor is committed to Tasmania's and Australia's maritime industry. We are a seafaring nation, and this suite of bills has used the experience of those in the industry to best target how we can rebuild our once-great Australian shipping industry, a process that has seen industry, unions and government work together in the national interest. It is a great display of how these parties recognise that it is in their interests to achieve a positive outcome in the nation's interest, rather than picking over the leftover hulls of our shipping fleet. I commend these bills to the house and urge all to vote in their favour and support maritime workers and shipowners.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

These bills—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—have been a long time in the making. In March 2008 we had a House of Representatives committee inquiry into our maritime trade and the state of our shipping industry. Australia as an island continent, as Senator Joyce pointed out, has a deep interest in the health of its shipping industry, as its economy depends on imports and exports. That report was tabled in October 2008, and it set out the basic architecture of the package that we are debating today.

I live in a port city. I call Fremantle home. I note that, on the way in and out of the office every day, you see the vessels that are tied up loading cargo and unloading cargo, and very, very few of them are registered in Australia. That is because our shipping industry has been decimated in the last few decades through policy neglect—or, you could even say, through deliberate policy intention. When Senator Joyce talks about competitiveness and about how uncompetitive he believes these bills will make the Australian shipping industry, he is talking about being competitive with Monrovia, Liberia, and with some of the other ports of convenience that the world's shipping fleets are registered out of. I think these bills give quite substantial effect to the principle that as a maritime trading nation Australia needs a strong shipping industry. Subsequent to the report of the House of Representatives inquiry in October 2008, there was a round table set up that eventually produced a discussion paper in 2010 with the support of the department that effectively laid out the bones of the reforms that we are discussing today. Subsequent to that, there were three shipping reference groups that were established through 2011 and, subsequent to these bills being tabled, there was a Senate inquiry to which, I should note, there was no dissent. That was a report tabled by the Senate Economics Legislation Committee without dissent. In case the coalition were hoping otherwise, I should say at the outset that the Greens will not be supporting a proposition to refer this package to yet another inquiry—this time to the Productivity Commission. As the MUA note in their submission, this is one instance where you can say these bills have been well consulted on—they have been put through the wringer, as it were—and everybody has been given the opportunity to make their views known.

There are three major elements to the package comprising the bills that we are debating today. The ones that I will focus on are effectively around the need for reform to protect the Australian shipping industry, such as it is. I will focus my brief comments on the coastal trading bills, the international shipping register bill and the taxation incentives. Our shipping industry has been in decline for many years, even though it carries upwards of 20 per cent of the nation's freight, and the Australian Greens believe that there is room for a larger proportion of our freight task to be taken up by coastal shipping. At the same time, there are now only 22 Australian registered ships engaged in major trading, down from 55 in 1996. The House of Representatives inquiry of 2008 into rebuilding Australia's coastal shipping industry found a number of things: that we are trading in an intensively competitive global environment, with many nations using tax incentives to attract shipping tonnage; that Australian ships are at a disadvantage as they are subject to the standard corporate tax rate, while competitors enjoy lower rates of tax; and that Australian ships also face competitive disadvantage in relation to wages and conditions on foreign ships.

We have a highly liberalised coastal trading framework. Substantially, we are working with the legacy of Howard era reforms that allow foreign-flagged and -crewed vessels to operate around our coasts under a permit which allows the vessels to be exempt from certain Australian requirements, including allowing lower-paid foreign workers. The basic principles were laid out in the introduction to the Senate committee report, which was tabled a short while ago and which is worth putting onto the Hansard record. The committee noted:

…revitalisation of the Australian coastal shipping sector begins with regulatory reform. Coastal shipping in this country is governed by a complex regulatory structure and the Committee has made several recommendations intended to harmonise shipping policy and regulation. Growth in the sector will be further enhanced by incentives such as the introduction of an optional tonnage tax and accelerated depreciation. Strong action on the part of all maritime stakeholders is required to abate the skills crisis, but government can assist and it is the Committee's recommendation that Australia's tonnage tax regime be linked to mandatory training requirements.

I congratulate the government on not taking a narrow approach but, for a change, taking a very broad, sector-wide approach to these reforms so that we are not seeing piecemeal reform. We are seeing a number of important measures being advanced at the same time so we can see quite clearly how the different elements of reform fit together. I am hoping that on my ride into work in a couple of years I will be able to see ships registered out of Fremantle or the Port of Melbourne or other Australian ports. There is no reason at all for a country like ours, which is so exposed to maritime trade, to not have a strong shipping industry.

The coastal trading bills provide the regulatory framework for access by vessels to coastal trading into Australia, so it is intended to support Australian vessels while still enabling access to foreign-flagged vessels. The framework will replace the current permit system for access to Australia's coasts with a licensing regime and it will create three kinds of licence: general, temporary and emergency. The general licence for Australian vessels would be for unrestricted carriage of domestic cargo and passengers by vessels registered on the Australian General Shipping Register. They will be crewed by Australian citizens, permanent residents or people with work visas. In the instance of temporary licences, foreign-registered vessels can still apply for a licence, and a general licence holder must be informed and the applications are then subject to negotiations for carriage by general licence holders' ability to nominate for the trade. Making that area of the trade contestable is, I think, quite an important step forward. The bill then achieves basic standards for rates of pay and conditions on ships engaged on coastal trading. I note that this is similar to the airline pilot and cabin crew demands which are part of the disputes unfolding at the moment with Qantas in particular; they are simply asking for similar rates of pay in light of airlines basing crew overseas and paying lower rates. So I think that, in these reforms, there are some important flags raised for the aviation industry.

I want to acknowledge the trade union movement's support for their colleagues and comrades in other countries, because it is easy enough to accuse them of simply seeking to protect and cocoon Australian industry from foreign competition. But, as the MUA point out in their submission to these bills, in particular to the Shipping Registration Amendment (Australian International Shipping Register) Bill:

The bills provide for the engagement of non-national seafarers for all but two positions on ships registered on the international register providing considerable scope for the engagement, training and employment of seafarers from regional nations, such as the islands of the south-west Pacific, including PNG, Timor Leste under structured arrangements, such as regional government-to-government partnership agreement, that we anticipate will dovetail into our international development assistance through AusAid programs for these nations.

There is in fact support here not only for Australian shipping but also for the training and the enabling of seafarers in other countries in our region to seek employment and to find themselves on these vessels.

The last thing that I wanted to note in the Australian International Shipping Register is the regulation of vessels to ensure an international reputation for high-quality maritime safety standards, while allowing competitive alternatives. What is being attempted in this package is to balance competition with, for example, labour standards and safety standards. Many submitters to the Senate inquiry made that important point, in particular the MUA—the importance of not simply, as Senator Joyce did, emphasising the competitive arrangements but reminding the chamber that poor safety and labour workforce standards on these ships carry very serious local consequences, as we are seeing now on an almost annual basis. For example, the vessel that drifted towards the Great Barrier Reef only last month could have had absolutely devastating consequences for the environment of the Great Barrier Reef.

Finally, the incentives bill that provides tax concession to Australian shipowners, allowing greater competition with foreign vessels, is something that we had to take a very good look at. Ultimately, I think it is a commonsense application of competition principles. These are very difficult playing fields to level when we are competing with countries that leverage much greater economies of scale than we can. Nonetheless, I look forward to reviewing these bills in the future to establish whether or not they have had the desired impact of bringing Australian flagged vessels back into our ports and on to coastal trading routes. I congratulate the MUA and its supporters, many of whom are in the gallery this morning, for their steadfast advocacy of the bill—I say steadfast but there are probably stronger words I could use. They have been very strongly in support of this package, of their workforce and of rebuilding the Australian shipping industry. I look forward to the passage of these bills later in this session.

Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Fisheries and Forestry) Share this | Link to this | Hansard source

I rise to make my contribution to the debate on the five bills that make up the shipping reform package. I do so from the particular perspective of my home state of Tasmania, which relies intrinsically on shipping and transport for almost everything that happens in that state—for all manufacturing and for all the goods that come onto the island. Effectively, we rely on shipping for everything that we consume and everything that we manufacture, except for some high-value products which are flown in and out. The cost of shipping and the impact of that cost on our island state is manifest. It is one of the most important issues for Tasmania.

In her presentation, Senator Urquhart mentioned the $20 million contribution that the Commonwealth government has made towards the cost of export for export businesses in Tasmania. I have to say that the way it has managed that process, particularly through the estimates process during the last fortnight that we were here, has been nothing short of disgraceful. For the Department of Infrastructure and Transport to have told the Senate Rural and Regional Affairs and Transport Legislation Committee on the Wednesday evening that negotiations with the Tasmanian government had not yet been finalised and that final decisions were a couple of weeks away, while at the very same time the media had an embargoed media release from the minister indicating how some of the funding was to be spent, is nothing short of a disgrace, in my view. The committee clearly felt misled by the evidence that was given. The following morning I received a phone call from a witness to the Senate Economics Legislation Committee inquiry into these bills. That person told me that the evidence I had been given at estimates was wrong, which indicates to me that the Senate should consider very closely the evidence that was given to it during those hearings, despite the denials that have come back in writing from the minister.

Industry in my state thought that the $20 million was going to assist them with exports. They were quite rightly disappointed to find that $4 million was being put into Tasmanian government-owned infrastructure. Mr Deputy President, I know that you as a Burnie boy would have some real interest in the investment that is being made in the port of Burnie. That investment is important; I will not deny it. That is an important investment that is being made. I live on the north-west coast, in Devonport, like Senator Urquhart. I spend time with my office looking out over the port, watching the port operations and understanding how vital it is to our home state. But that funding should have been given to the industry to do what the government told them it was going to do and what the government gave them the impression it was going to do: assist them with their export costs in the short term. The money being spent on the Burnie port is a medium- to long-term solution and should have been part of another funding package, if it was going to be spent in that area. It spent another $1.5 million setting up a committee, effectively doing work the Tasmanian government should have been doing in the past. There is no integrated transport plan for my home state of Tasmania and we still suffer from ad hoc decision making in Tasmania. There was $150 million allocated to the port of Bell Bay for upgrade work, yet progressively shipping companies have been pulling out of there.

The impact on Tasmanian exports is part of that problem but it is also part of a global change in the way that the shipping industry operates. Globally, export ships are getting larger; they need access to the larger airports and therefore Melbourne is becoming the regional export hub. That is one of the reasons that we are being affected, but it is also one of the reasons that we need to make sure that our shipping around the Australian coastline is globally cost competitive. We are not going to be able to compete in global markets unless we ensure a competitive industry here in Australia. We have heard expressed over the last couple of years significant concerns about our manufacturing sector and its cost competitiveness and its place in the global market.

One of the significant costs being felt by our manufacturers is the cost of shipping around Australia. I will give an example, again from my home state of Tasmania. A major food manufacturing plant, Simplot, estimates that the cost to it of the removal of continuing voyage permits is in the vicinity of $7 million a year. Coles will not give it that money, Kentucky Fried will not, McDonald's will not and Hungry Jacks will not. It means that it will lose markets—and it has lost markets. When we see potato farmers in Tasmania complaining that they have to leave their potatoes in the ground and McCain move all its vegetable processing to New Zealand because it is not cost competitive, we know that the cost of shipping is one of the elements that is affecting that. That is $7 million for the additional cost of shipping that is making an impact on the industry.

The carbon tax is another cost, of $8 million a year, imposed by this government on that plant. None of those companies is going to give Simplot any of that money. Woolworths has said that the cost of its carbon tax is something in the order of $64 million. It is going to absorb that, but it means it will not accept cost increases from the carbon tax from any of their suppliers, either, unless they can justify it. Coles has said the same sort of thing. So the cost of shipping, the cost of getting produce in and out of this country, and particularly on and off my home state of Tasmania, is absolutely vital. If you go back and look at history you will see that whenever there has been an increase in access to Tasmania and particularly a cost reduction in access to Tasmania there has been a blip up in the economy. That is a clear indicator that access and the cost of access is vital to my home state of Tasmania.

Shipping, as I have said, is a global industry. We need to ensure that we are cost competitive globally. We cannot be imposing artificial restrictions on our shipping sector if we are going to be competitive. We do not want, as the petroleum industry has said to us, the potential impacts from shortages of petroleum and fuel in Tasmania because they cannot be certain or they cannot predict 12 months in advance, as this legislation determines, the shipping movements that they will need to move the petroleum backwards and forwards and in and out of the state. We just cannot afford to be putting those artificial restrictions in place. Those artificial impositions add cost and uncertainty to the economy, particularly for an island state like mine, which relies so heavily on transport.

I acknowledge, though, that the government have accepted, as I understand it, an amendment from the opposition in the House of Representatives in relation to temporary licences and some of the movements around the countryside of Australia. I think it really important to acknowledge the fact that they are prepared to consider some of the elements that we are putting up. But I really urge the government to consider this. We have had in the last six or eight months significant issues in my home state.

We have seen Western Australia and New South Wales complaining about the fact that they are having to prop us up with GST revenues because our economy is not going all that well. One of the reasons our economy is struggling is the impacts on companies like Simplot, because there is no global export shipping service coming into Tasmania since the AAA service pulled out in May last year. It has gone from costing something like $1,800 to get a container to Singapore to costing an additional $1,300 or $1,400 to get it to Melbourne and then the $1,800 to get it to Singapore. Those are the sorts of costs that we are talking about. Bass Strait is one of the most expensive stretches of water on the globe. We need to make sure that we are cost efficient in doing that if we want my home state—and I do want this—to be playing its part in the overall economy of this country. It is absolutely vital that we do that.

The objective of having a coastal Australian shipping industry is a noble one. I share Senator Ludlam's view. It is great to see the four ships that come in and out of my home town of Devonport and the two Australian owned ships that go into your home town of Burnie, Mr Deputy President, that are coastal ships and Australian owned. I acknowledge Senator Urquhart's comments about employment and the importance of those vessels to our local economy, but we have to be looking at this in the sense of a broader economy.

We have just had the Commonwealth government come in and put $324 million into the Tasmanian health system. Because of the state of the Tasmanian economy, we cannot raise the funds to look after fundamental services in our home state. If we have a strong economy and vibrant manufacturing, export, agricultural, mining and tourism sectors in our home state, we will be able to raise the funds that we need. It will take the pressure off the other states and their GST revenues and allow us to play our part.

My view is that the Greens support these bills because they are all about imposing cost on a whole range of industries. They are about imposing cost on the mining sector, the forestry sector and the fishing sector. They do not want to see economies of scale. They want to make them globally uneconomic to operate so they can have them shut down at a local level. That is why the Greens are supporting these bills. It is not because of any love for the maritime workers of Australia or the Australian shipping industry. They want to see us move back towards cottage-style business and industry. They do not want to see us operating at a globally competitive level. They just want us to scale everything back, to shut everything down, to close off huge areas of Australia to Australians and lock Australians out of Australia. That is why they are supporting this legislation. The Greens are quite happy to see all those additional costs imposed on our industries to make them unsustainable and uneconomical on a global scale. They are not interested in global markets. They do not want global markets. They want to close everything back down to a local level. That is the fundamental reason behind their stance.

The government claims to support our manufacturing sector, our agricultural sector and our food-processing industry, but these are real impacts and there is not just one. This government has done a number of things. I have already mentioned some of them. They have taken away the capacity for continuing voyage permits, adding cost to our food-processing sector, and they are losing markets as a result. We are losing jobs and volume. With that volume and those jobs comes economic viability. If you go below a certain level you will start looking at the viability of the entire business. We are seeing that with companies, as I said before, like McCain, who are leaving Tasmania and Australia with their vegetable processing.

Here we have a government who continue to impose all of these costs on our businesses and industries—red tape, regulatory burdens, labour costs and all of these things. We need to be considering how we remove costs and burdens from our businesses. Adding additional costs through unnecessary regulatory processes around our shipping is not the way to do it. As I said, the motive to have an Australian shipping industry is a noble one, but let us not do it at the cost of the rest of the economy. Let us not do it at the cost of my home state of Tasmania, because it is having that effect. There is no question that that is the case. There are examples of it on the record already. When I look at a company like Cement Australia, dry bulk goods shippers, I see that they are going to wear a significant cost because of the carbon tax. They are also going to wear a significant cost as a result of this legislation. I can tell you the workers at that plant are very, very concerned about their futures because they are having costs continually added to the business that they work in.

The government will tell us that the additional cost of the carbon tax is minimal. I can tell you that in Tasmania it is going to be felt more than the national average because we have the additional cost of shipping. I know it adds over one per cent to the additional cost of shipping that is going to be added in Tasmania because I have spoken to the businesses who are working out the costs. But it is not just those costs. Even TT-Line, the Tasmanian government owned business, have said that their shipping costs are going to go up in excess of 10 per cent as of 1 July, the carbon tax being one of the reasons.

So we continue to add and add costs to business. We then look at the economy and ask: why is the Tasmanian economy in such a terrible state? On the face of things, most people in Tasmania say it is because of the absolutely hopeless government we have down there that is in coalition with the Greens. It has just destroyed confidence. That, on the face of it, is true, but you have all of these other underlying effects. You have a government that is making ad hoc decisions without any plans, at the whim of the Greens, closing down industries and destroying the investment confidence in the state.

But you also have these other additional costs. The federal government never looks at them as a whole. They will use a national average to say the impact of the carbon tax on the cost of living, for example, is 0.7 per cent. But look at the Bass Strait islands, which also have important manufacturing industries. They are looking at significant costs to their businesses. King Island beef and King Island cheese are some of the best known brand names in Australia. The impact on them of the cost of shipping is going to be significant. It is already high because they are out in the middle of Bass Strait. They are 100 per cent reliant on shipping for the life of their businesses, yet here we have a government that continues to impose additional costs. Each time they say it is only an incremental cost, that it is only a small amount, but they do not add it all up.

So you put $7 million here as the cost on Simplot for the loss of continuing voyage permits and they lose one of their potato chip supply contracts in South Australia as a result. You put another $8 million on top of that for the cost of the carbon tax. How long before they are no longer sustainable? I have to say this company is being very proactive. It is working very hard cooperatively with its growers to ensure that it maintains contracts. It has taken the potatoes this year that it was contracted to take, but it does not have the capacity to take extra when the farmers have a good year. So when the farmers have a good year where is the payoff? There isn't one. Farmers are giving away potatoes with a bale of pea straw at the moment in Tasmania because they cannot sell them to the processors. That is the situation that is occurring. Those sorts of impacts are coming because this government continues to impose additional costs on industry. It might only be incremental each time the government does it, but it continues to add up.

The one thing that we need in this country is cost competitive transport. It is a large country. Huge amounts of our bulk goods, particularly our dry bulk goods, are shipped around the coastline and it is important that we do this in a globally competitive manner. We live in a global economy now. We are seeing the results of that. We are feeling the results of that in our economy. I am not saying they should pay Third World wages—I am not saying any of that, so do not accuse me of that—but we must not put in place artificial regulatory burdens that add additional costs. I have said a number of times that to have an Australian owned shipping industry is a noble idea, but it must be cost competitive so that the rest of our industries that rely on shipping—and my home state in particular is dependent on it—can thrive economically. Otherwise, you are going to have to continue to subsidise my home state. You are going to have to continue to pour money in there when you do not need to.

We need to change the government so we can get some decent decision making—that is granted. That has to occur and the sooner the better. The sooner we get rid of this absolutely hopeless Labor-Green government in Tasmania the better for all of us in my home state. But we do not need the Commonwealth government continuing to impose additional costs that make us unviable economically.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to support of these bills before the Senate today. I must say I nearly fell asleep during Senator Colbeck's presentation, but let me tell you, Senator Colbeck: we know what it is about. It is about trying to reduce the conditions of seafarers both here and internationally. I was on the committee and I could see what the business people were pushing for. They want to reduce the wages and conditions of seafarers in this country. They do not want to give seafarers a fair go. Your definition of 'globalisation' is exactly what you claim it is not; it is about trying to push the wages and conditions in this country down to the lowest level.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Absolute rubbish.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Macdonald, if you would stop—

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

Senator Cameron, please stop worrying about the interjections and please address your remarks to the chair.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I am never worried about interjections; the more the merrier—certainly from Senator Macdonald and Senator Colbeck. That is fine. It is clear that the two people from the coalition who have contributed to the debate on the bill today really do not understand what it is about—and what would you expect from the coalition? This is a coalition with absolute economic incompetence, with only one argument about trying to improve productivity. We hear about productivity and costs. What was their approach, in the 11½ years of the Howard government? Their approach was to try to destroy the wages and conditions of workers in this country, to try to force them down to the bottom. That is the coalition, and they are waiting with Work Choices in their back pockets, waiting to come back, waiting to support big business and trying to drive wages and conditions down. We heard from Senator Joyce and Senator Colbeck. Let me give a bit of advice to Senator Colbeck: you should stop worrying about this bill, because this is a bill that will benefit Tasmania. What you should do—

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Madam Acting Deputy President, I raise a point of order. Senator Cameron has been around long enough to know that he should not address senators across the table and that his remarks should be through the chair.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

There is no point of order. I have brought this to Senator Cameron's attention.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Thank you. Through the chair, I would ask Senator Colbeck to concentrate on the real issues for Tasmania. The real issues for Tasmania are to get an effective, efficient shipping fleet of long-term viability in this country, and that is what this bill is about. If the Tasmanian senators actually stood up here and fought for Tasmania, they would be fighting against the sycophantic approach by the Western Australian Liberal Party towards Twiggy Forrest, Gina Rinehart and Clive Palmer, who are in there arguing that all the money should be in Western Australia or in Queensland and that Tasmania should be left to swing. That is the position. It is okay for Senator Colbeck to leave the chamber now, but I have a bit of advice for him, through the chair: if you want to stand up for Tasmania then stand up against the mining magnates who want to rip back any decent taxation from this country.

We are a nation that has been built on shipping. We need a viable, growing shipping industry. But that has to be done on decent wages and decent conditions. We hear, 'We're in a globalised economy,' but that is simply code for: 'We want overseas maritime workers to be plying their trade in this country on the lowest wages and conditions possible.' That is what the coalition want. That is what they have always been about. That is why the Howard government—and I see Senator Sinodinos has just walked in—was up to its neck in ripping away the conditions of maritime workers in this country. That is why Senator Sinodinos was sitting around the cabinet table advising John Howard to do something about the carbon price on one hand and then backflipping when he came in here. This is the absolute hypocrisy of the coalition. Their idea of improving productivity is to put dogs on the wharves, to get the thugs on the wharves with their balaclavas, to try to get rid of workers who are earning a decent wage and to put in lower wages and conditions. We all know what the coalition is about. But you have to understand that the MUA is here to stay. They are going to have decent conditions on the wharves and decent conditions in the industries they are involved in.

The arguments being put forward by Senator Joyce do not bear up under any analysis whatsoever. I do not often agree with Senator Joyce, but I do agree with him on the Productivity Commission—you have to take it with a big grain of salt, given its ideological bent to come after working people wherever it can. Senator Joyce's view of the Productivity Commission—on the public record—is that you should use Productivity Commission reports for toilet paper. That is his argument. Yet he comes in here today because the coalition has said, 'You've got to oppose this bill.' And what does he argue for? He argues for a Productivity Commission inquiry. What a disingenuous approach from Senator Joyce. On one hand, he says to use the Productivity Commission reports for toilet paper—even I do not say that!—and, on the other hand, he says, 'Let's have a Productivity Commission inquiry.' What a joke. What a load of rubbish from the coalition—a Productivity Commission inquiry about making sure we get decent wages and conditions and a decent industry in this country. Well, Senator Joyce just gave the game away.

I think Senator Urquhart outlined earlier the National Party's policy on shipping. What is the National Party's policy on shipping? The National Party's policy on shipping is, almost word for word, this bill—what the government is seeking to do. Senator Joyce needs some credibility. I know he does not have a lot of credibility on an economic basis. I know he got sacked because he could not cop his shadow portfolio in finance. But he has to have a little bit of credibility left, and he should support the National Party policy, which says, on page 65, that they would introduce a tonnage tax. I do not suppose that is a 'great big new tax', but they want to introduce a tonnage tax, and they said that if they were in power they would do that from 2011-12. That company tax would be on an opt-in basis, linked to mandatory training arrangements. So the National Party proposes mandatory training arrangements for the industry, and we support that view. But they would introduce a national system of training support under the supervision of the Australian Maritime Safety Authority. Again, we will cop to that. Also, they would examine ways to reduce the income tax disadvantage suffered by Australian seafarers operating outside Australian waters, compared with seafarers from other nations.

Well, now is the chance for the National Party, instead of getting up here making disingenuous speeches they do not actually believe in, as Senator Joyce did. He had to spend half his speech talking about a carbon price when he does not understand the industry and does not know the benefits that this will provide for the industry. The National Party could now stand up and actually support its policy, what it stands for. Stop flip-flopping around every time the Liberal Party tells you that you cannot support your own policy. Stand up for your own policy and support this bill. That is what you should be doing.

A tonnage tax is on the National Party platform. Ours is a zero tax rate, as recommended by the industry and the Treasury. So we can get some agreement on that. They want a national training system. The bipartisan committee supported that, and so does Labor's shipping bill. We want a tax exemption for Australian seafarers, and the National Party support that. We want to establish a second register, and so do the National Party. So, when this bill comes to the floor, I would expect the National Party to support their own policy by supporting this bill. That is the right thing to do. This is a good bill. It is about ensuring that we have an industry in this country that can help service the needs of Australia. We are a shipping nation and we should support our shipping industry and make sure that we do the right thing by the industry.

Clearly, there was political inference in the shipping industry under the Howard government. It was supported by Senator Sinodinos. So when Senator Sinodinos gets up on his feet here you will know that he was the guy who sat around with John Howard and Peter Reith saying, 'Crush the MUA. Put the dogs on the docks. Put the thugs on the docks. We will drive wages down.' That is Senator Sinodinos for you. The Australian said that, in Senator Sinodinos, a great new economic mind was coming into parliament. Well, Senator Sinodinos sat with John Howard and said, 'How do we fix our economic problems? We try to destroy the MUA. We try to drive wages and conditions down for workers all over this country.' Senator Sinodinos will continue that when he stands up here and opposes this bill.

This is about a sophisticated economic development position, taking this country forward. It is not about the lowest common denominator. It is not about trying to cut costs at the expense of maritime workers or at the expense of maritime workers' jobs. It is about training, about cooperation and a compact, and it is about sophisticated tax support for the industry. These are things that happen overseas, but in the 11½ years that the Howard government were in office they never once thought about it.

So we will have Senator Sinodinos, the so-called economic guru, railing against government interference—yet when he was sitting there with John Howard, working out how we should interfere in industry, what was his plan? His plan was to put the Alsatians on the docks. Put the Rottweilers on the docks. Put the thugs on the docks. That is what was done by the Howard government, supported in the Senate by Senator Macdonald.

They are all sitting there opposing this bill, a bill that is based on a sophisticated approach to industry development. It will bring our industry into line with what happens in about 40 other countries, which is to support our industry with a decent tax base. But what you will get is speeches like the ones we got from Senator Colbeck and from Senator Joyce. I suppose Senator Sinodinos will be a little bit more sophisticated than Senator Joyce, but that will not be very hard.

My view is that, in talking about the problems the country is facing, those problems are not with this bill. This bill is about improving the lot of the industry and the life of maritime workers. It is about improving every aspect of the industry through training and sophisticated tax approaches, to build our industry. It is not about artificial restrictions, as Senator Colbeck would have it. It is not about the cost of shipping, because this will be done in a cost-effective way, a sophisticated way, that means we will have a decent industry in this country. When Senator Sinodinos gets up to speak, that is what he should speak about. He should speak about getting a decent, sophisticated industry in this country that is about bringing Australia back to what it was: a strong maritime nation capable of moving some of our own goods, with workers getting decent wages and conditions. That is the problem.

Here you have to pay decent wages and provide decent conditions. I got a bit sick and tired of listening to some of the submissions at the Senate inquiry. Some of the dry goods people came in and said that they wanted to continue to exploit overseas maritime workers, by keeping them on wages as low as possible, to keep costs down in this country. That is not the way to do business. We have to be a bit more sophisticated than that.

After hearing the speeches from the other side this morning, senators would well know that those opposite have no capacity to deliver on that. They have no understanding of the real drivers of the industry. It is simply about cost. It is not about the tax base and making sure it helps that industry. It is not about the training in the industry. It is not about a compact in the industry, where the unions can sit down with the employers and improve the productive performance of the industry. It has nothing to do with that. They are simply responding, as they always do, to business saying, 'This will cost us a little bit extra.' They run behind their big business mates and will oppose anything that is in the interests of the workers in this country. They will oppose sophisticated approaches because they are all about taking the low road in industrial relations and the low road in productivity. That was borne out by the two speeches we heard this morning.

Arthur Sinodinos (NSW, Liberal Party) Share this | Link to this | Hansard source

May I commend the previous speaker on his address, because it confirmed everything we would expect from Senator Cameron: no vision for the future, nothing positive, just an attack on the other side of politics—play the man, not the ball.

Let me begin by saying that as someone who was born in Newcastle, whose father was a seafarer and a member of the Seamen's Union, in the days when the general-secretary of that union was Eliot V Elliot, I have a long familiarity with the maritime trade and I respect the trade and the seafarers in it, because it is not always the safest or most comfortable of occupations. In the time that my father was a member of the Seamen's Union of Australia, I think he enjoyed the camaraderie on the ships, even though his English was not as good as it should have been. So it is good that there are members of the MUA here. My remarks are not addressed to them in the sense of saying, 'You are the problem; you are the villains.' That is not what this is about. What this country is about is how we bring people together; it is about how we create a sense of positivity and a vision for the future that is as accessible as possible to as many people as possible. The reason I say that is that, while there are elements of this bill that are understandable, in the sense of why we have gone down this road to seek to match some of the tax concessions and other benefits that are offered in the international sea trade, given the peculiar conditions that do apply in that trade, we do have to understand—and this is one of the obligations that we have as legislators—and acknowledge that whenever we make decisions, or confer 'benefits' in one sector, we have to make sure that those benefits are not at the cost of other sectors and that therefore the overall benefit to the national economy is not in fact a negative.

In saying that, I recognise, as I said before, the peculiar nature of the world's shipping industry. It is a very competitive industry. It is subject to a lot of volatility—there are times when shipping is in surplus, and that drives down rates and puts added competitive pressures on people, and they therefore seek to undercut each other; there are other times when there is a deficit of shipping and rates tend to go up. In recent times we have had pressure on rates to go up, as people realised they could not keep undercutting each other. So we recognise that volatility and we also recognise the nature of the international flags of convenience and all the other arrangements that operate in international shipping that create a capacity for shipowners to pay less tax in certain jurisdictions. That puts more pressure on other jurisdictions, such as ours, where we have, if you like, more of a First World tax regime.

I also recognise that around the world, starting with the US and the Jones act, there are a lot of First World countries that do restrict shipping with policies of cabotage, and that, in the context of international trade negotiations that are going on at the moment, there is not much progress being made on issues like removing cabotage—because, ultimately, if we are to have free trade and investment, that means all countries must take off their restrictions. So I recognise that we are playing on a very unlevel playing field.

But, in that context, we have before us a set of bills that do seek to create some very special conditions in the maritime industry. It would be fantastic if we could extend these conditions in Australia so that, in any industry in Australia where there was some potential competition and where there was some benefit conferred by foreign governments, we would seek as a government to match that. But in a sense, looking at this from the national economy perspective, we cannot do that; so we have to look at the costs and benefits of what we do in one sector and the impact that has on other sectors.

In looking at the costs and benefits of this legislation, we therefore have to take—and this is why my colleague Senator Joyce was supporting a Productivity Commission inquiry—an economy-wide view of how this sort of legislation would work. We have to take into account the impact of any increased red tape or regulation. We have to take into account the potential impact of increased costs for shippers and users of imported products and the like. We have to take into account, in other words, what the economists like to call the general equilibrium effects of doing things in one sector as they cross over into other sectors.

One other point I would like to make is that in relation to anything that involves international trade there is a lot of literature around, but often there are benefits in moving unilaterally on trade restrictions. Often we keep restrictions back as bargaining chips in international trade negotiations, and we can certainly do that with cabotage. But my point is this: there are also a lot of benefits to be gained from unilaterally moving to take advantage of cheap foreign goods and services that are potentially available, including in the shipping area, if they have benefits for the broader economy. But, as I said before, today is not the day to go into that. My point is simply that I support what Senator Joyce has said in relation to a Productivity Commission inquiry. That is a canvas on which we can look at the costs and benefits of going down this route as a whole.

Let me—as someone who was also involved in the events of 1998 around the wharves—paint the context of that. That was a context where our cranage rates were seen as being very low, by international standards, for a First World country. The issue was that, during the Hawke-Keating era, despite various attempts to address that, we had not made sufficient progress. That is why there had to be some sort of breakthrough and, in concert with the industry, there was an attempt by the Howard government to break through on the wharves—yes, some of it was not particularly pretty, but it was a situation that seemed to have gone beyond the point of dialogue and something needed to be done to cut through, and reforms were made. But since then there has been slippage on those reforms. As John Howard once said, reform is one of those ever-receding finish lines: we need continuing reform. This package will aid the industry in a very short term sense. But, unless the productivity compact that the MUA and others are talking about delivers real, enduring, sustainable productivity change, we will not have the shipping industry we deserve. Make no mistake, with our freight task set to double and even treble by 2020 along the eastern seaboard, coastal shipping must play a bigger role. There is an opportunity there. The industry and the union have to be more entrepreneurial and more willing to take risks to get rid of some of the work practices of the past in order to do this. Some people may say, 'We'll never match the wage rates or costs of some jurisdictions overseas.' I think that is defeatist. Why can't we look at greater productivity and innovation? Why can't everything be on the table that potentially restricts our capacity to do better? We are great innovators in Australia. We have a capacity to do that in this sector as well. I am very concerned that we do not have a situation where the government gives away these benefits, in good faith saying that these are being put on the table, and in return the productivity compact does not deliver the change that we are looking for. This is not about reducing wages. That is unsustainable. We all know that. If we reduce wages in one sector that just encourages people to leave that sector and go somewhere else. That does not actually build up an industry. What builds up an industry is when you create incentives for greater productivity and wages go up off the back of that. That is what we are about. That is positivity. That is about being optimistic about the industry of the future.

I suppose what I am saying is that in seeking to refer this matter to the Productivity Commission we also want to give time to see what will happen as a result of the productivity compact that the industry is putting together with the MUA and other stakeholders. We strongly support that process going forward because of all the evidence we have received from people within the industry. It is easy for someone like Senator Cameron to deride people in the industry and say that they have a vested interest. Of course they have got a vested interest. Their livelihoods are at stake as well. They want to know that they will be able to ship.

We have had evidence from people within the industry that they are concerned about the potential impact of costs on them. So we need someone who is impartial, a third party, to weigh up that evidence. That is not to cast aspersions on the public servants who have put together the regulatory impact statement; but, by definition, they say that they were unable to take into account actual numbers around what the productivity compact could do, because they had to take at face value that there will be a productivity compact and assume that it would have the benefits and the positive effects that the government says it will. So we need a rigorous process to look at this.

In that regard I have come across a number of comments from various people within the industry. Wallenius Wilhelmsen Logistics announced on 30 May that they could not commit to engaging the coastal shipping after 1 July, when the legislation takes effect. They stated:

Based on these proposed changes and new requirements it may become very difficult for WWL to continue participating in the coastal trade.

On 12 June, online marine publication Lloyd's List published an article entitled 'Coastal shipping reforms create contrary and adverse outcomes' highlights concerns with the shipping reform package. It states:

Minister ... Albanese’s new licensing regime, designed to promote Australian participation in coastal shipping, appears to be in the process of creating unintended consequences and adverse results.

Maritime executives argue that the system as a whole could also work to the disadvantage of domestic carriers. Shippers may end up moving large, heavy or unwieldy cargo by road rather than by ship. And Australian cargo shippers look likely to be put at a disadvantage as carriers reduce service offerings. Break bulk carriers, especially tramp operators, envisage that the requirements for being granted a one-year temporary licence, which involves notifying bureaucrats of an intended minimum of five voyages in advance, will likely result in them being unable to offer a service.

Shipping Australia in its submission to the House committee inquiry states:

The overall effectiveness of the Bills taken as a whole is, in our view, dependent on the productivity improvements that will arise from the proposed compact between the unions and employers.

That is why, as I say, it would be good to have time for the Productivity Commission to go through that process. I recognise in any negotiation that it is useful to be able to say, 'The government have delivered on their end; therefore, it is now up to us as unions and employers to get together.' My point is simply this: there needs to be an objective process to make sure that what is being put on the table as genuine cost reductions, productivity improvements and innovations will deliver the sorts of benefits that the government's own regulatory impact statement is suggesting should come forward out of this particular shipping industry reform program.

I go back to an issue raised by Senator Cameron in his contribution about the low road versus the high road on productivity, and that is: whatever changes the coalition may ultimately make to industrial relations policy, shifting the balance more towards the centre, the point is that they are all aimed at promoting productivity. If you go back and look at the record of the Howard government, including in the period of the dreaded Work Choices—the industrial relations policy that dare not speak its name—real wages were going up, productivity was going up and the economy was going strongly ahead. It is possible to achieve that sort of win-win situation. Too often this government has taken the view that it has to intervene to protect people. The best way to protect people is to educate them and to help make them strong and dependent on their own capacity to find their way in the world. There is no way you can do this simply by the government always acting as the referee because in the long run you can never create really independent, capable people if they are always dependent on government propping them up. I fear that this is a sector where for too long governments have intervened in various ways and the results have not been what they should have been.

In summary, I support Senator Joyce's comments and the comments of all of my colleagues, including Senator Colbeck, who spoke about the particular issues in Tasmania. On both sides of the house there is a commitment to having an internationally viable shipping industry and, as I said before, we recognise the unlevel playing field that has developed in this particular sector. But it is not a reason why we should necessarily put forward ideas in this sector which perhaps provide an advantage to this sector over other sectors and may not be providing a national net benefit. On that point, I finish my remarks.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to speak in support of the Shipping Reform (Tax Incentives) Bill 2012 and related bills. They are vitally important to the ongoing sustainability of Australia's domestic shipping industry: setting the right conditions for operators to do business and maintain Australian flagships, restoring fairness to the architecture of the system of industrial relations that underpins Australian flagships, promoting health and safety in what is an inherently dangerous occupation and, importantly, providing incentives for the provision of training and the skilling of the workforce to ensure its long-term sustainability. We are an island nation and 99 per cent of Australia's international trade is conducted by ship. More than $200 billion worth of product is transported from our ports every year. This represents around 10 per cent of global sea-based trade. Australia has become the fourth largest carrier of sea trade on the planet. But despite the fact that 99 per cent of Australia's trade is conducted by ship, less than one-fifth of the trade is carried by an Australian merchant fleet. There are currently only 22 major trade ships carrying the Australian flag. This compares to 55 flagged Australian ships during the years of the Keating government in 1995. So over that period we have had a reduction by more than half in the number of Australian flagships and that slow decline has happened while Australian exports to the rest of the world have been growing. That is why these bills are so important and that is why the Senate must pass these bills. These bills mean that productivity and growth will be returned to the Australian shipping industry. They are a significant set of reforms that will revitalise an industry that was unfortunately forgotten during the Howard years.

The Shipping Reform (Tax Incentives) Bill and the Tax Laws Amendment (Shipping Reform) Bill are the first pillars of the reform package and they are vital to Australian shipping operators. Our shipping companies are competing against foreign operators that do have competitive taxation regimes and regulation of employment arrangements. The reforms contained in these bills will ensure that Australian flagged ships are provided with the same incentives: a zero rate of tax, meaning income from Australian flagged passenger and cargo vessels will not attract company tax; accelerated depreciation arrangements, meaning that Australian flagged vessels can now depreciate ships over 10 years instead of the current 20-year period; rollover relief for selected capital assets, meaning that when a ship is sold for profit the tax liability can be deferred by replacing the sold vehicles; tax exemptions for seafarers working overseas on qualifying vessels, meaning that a refundable tax offset will be available to Australian employers of Australian resident seafarers engaged in international trade; and, a royalty withholding tax exemption where vessels are leased by an Australian company from foreign owners under a demise or bareboat charter. These are a fantastic new set of opportunities and set of conditions for a fair and reasonable shipping industry in Australia.

The Shipping Registration Amendment (Australian International Shipping Register) Bill is the second part of the reform package. That will ensure that the Australian International Shipping Register will help our industry grow and take advantage of the enormous opportunities created by growth in the export shipping sector. Vessels on the international register will be Australian flagged. When international vessels undertake an overseas voyage, they must provide the crew with terms and conditions in line with the Maritime Labour Convention. This is the same practice used by major maritime nations that offer international registers. When Australian international shipping register vessels work domestic coastal routes, importantly all the crew, irrespective of nationality, will be covered by the Fair Work Act. This will remove that insidious practice that occurred under the Howard government of 'ships of shame' operating in Australian waters, employing foreign crew and giving them pay and conditions inferior to the basic standards provided by fair industrial relations laws in this country. Importantly, these bills will also promote safety. The crews will be covered by Australian domestic occupational health and safety laws and also Australian environmental laws.

This issue is close and dear to my heart. My grandfather was a wharfie. He worked at the Hungry Mile in Sydney for many years in the days when it was tough to work as a wharfie. He was quite badly injured on the job and hospitalised for a significant time. He broke his leg and fractured his pelvis and was in hospital for a couple of months. During his period of hospitalisation not once did anyone from the company that he worked for come to visit him or his family, with any concern for his welfare. These were the days before adequate occupational health and safety laws and adequate coverage of a person's income through workers compensation.

Naturally his family were concerned about how they would survive. But they survived for one reason. That reason was that my father was a member of his union, the Waterside Workers Federation. During his period in hospital, at least once a week and sometimes two or three times a week the union organiser, a fellow by the name of Tas Bull, someone who went on to lead that union and become a great leader and promoter of workplace rights in this country, would visit. He made sure that our family never went without and that the family had the ability to survive. That is the tradition in which the union, now the MUA, has operated in this country. That is the reason why my grandmother always said to me in the wake of that accident, 'Always join the union and remember what the union did for our family. We wouldn't have survived without them.' No-one from the company ever came down to visit my grandfather in hospital and ensure that he was okay and that the family could survive. But his mates on the wharves, the wharfies, who were members of the union, regularly carried the hat around and ensured that there was an income for the family to survive. So it is important that we continue to promote occupational health and safety and adequate workers compensation laws for people working on our wharves and for those who are working in seafaring around our coast. These laws do that. They restore fairness and equity which, unfortunately, was diminished during the years of the Howard government. I find it somewhat remarkable that Senator Sinodinos would refer to what occurred on the wharves in 1998, when we saw those insidious images of dogs and people in balaclavas attacking Australian workers and their conditions, as a breakthrough. It was nothing less than a disaster. It was a disgrace and, in the end, was ultimately found to be illegal by the Australian courts.

This government does not promote those sorts of practices and will not allow them to occur on Australian wharves or in our domestic shipping industry. That is why these laws are important. We prefer to promote cooperation between seafarers and their employers and between wharfies and their employers as a means of promoting productivity and ensuring that we are dealing with the issues faced from international competition. These bills will promote cooperation.

The bills will provide for the introduction of the Maritime Workforce Development Forum. Our maritime industry currently employs around 14,000 people and one of the greatest challenges it faces, similar to the rest of Australian industry, is an ageing workforce. The current average age across the sector is almost 45. Skills, education and training must be at the heart of any industry to see it grow and prosper. The Maritime Workforce Development Forum, which is an important part of these reforms, will address areas that are fundamental to building our skills base. This will include a workforce plan for the medium term to address issues, including the ageing workforce and the most immediate skills gaps.

The bills are a product of an extensive period of consultation with industry, and amendments to the bills have been introduced in response to issues raised by stakeholders through the parliamentary inquiries. In February 2009, the Minister for Infrastructure and Transport formed an advisory group to work together to implement the Rebuilding Australia's coastal shipping industry report recommendations. A discussion paper was released on 1 December 2010 and submissions from the industry provided a great amount of feedback on the proposed reforms that are before the Senate today.

I do take issue with some of the comments raised by Senator Sinodinos and other speakers in relation to Simplot's comments both to the parliamentary committee and publicly regarding these reforms. The comments made by others in respect of the comments by Simplot are quite simply misleading. Simplot's comments relate to increased costs for services at Bell Bay. They are not related to shipping reforms. Simplot denies the $7 million figure that has been put by others, so it is misleading for some senators to come into this place and use issues associated with other occurrences in the world economy as opposition to these reforms.

The feedback from many involved in the consultation period and from the parliamentary inquiries was positive. Many understand that these reforms are vital to Australian shipping. This is a sector of our economy that must be provided with the right tax incentives and conditions for investment and the right conditions to ensure fairness and reasonableness in the provision of wages, conditions and occupational health and safety laws to ensure that this industry can grow and flourish. The Stronger Shipping for a Stronger Economy package corrects the mistakes made by previous governments in an important industry for our economy. It replaces years of decline and sets our shipping industry on a steady course with an even keel towards growth and prosperity. I commend the bills to the Senate.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

I remain nonplussed as to what we are doing in this place debating this particular legislation since it will in no way achieve the goals that have been set by the minister and the government. Since the Navigation Act 1912, coastal shipping permits have always protected Australian flagged vessels but, unfortunately, they have not been competitive internationally, they have not been viable and they are not viable now. I am pleased to see that there was one point of commonality with Senator Thistlethwaite, and that is that both of us in fact had grandfathers who were union members, in my case, of the Lumpers Union on the Fremantle wharves around the 1920s and 1930s. So I come to this particular argument with the same degree of enthusiasm but from a different perspective because mine is one of trying to encourage new business and trying to grow business.

Other speakers have mentioned the fact that we are a coastal nation and that 99 per cent of our export and import activity comes by sea. The other point to be made is that Asia is the growing region of the world. Europe is now closed. Europe is declining not only in terms of numbers but also economically and we are seeing the biggest shift in the world economy since the industrial revolution to Asia. We also know that to survive and to take our place in the Asian world we have to be internationally competitive with Asian suppliers, and this legislation is simply not going to do that.

We are aware that under the current legislation, as in the past and as will be in the future, Australian registered vessels already have priority in the movement of cargo within our coastal trade. So one must ask the question: why and how is it that we have seen such a decline in the number of coastal vessels under the Australian flag? It is now some 22 and going down. Do we think that these incentives, as they are described in the legislation, are going to do anything to encourage Australian-flagged ships to remain so or indeed to encourage overseas shipowners to have their vessels Australian flagged? The answer regrettably is no, they are not. Why? Because countries with which we compete, including Singapore and others, already offer the same sorts of incentives that are contained within this legislation. So, unfortunately, of themselves these are not going to be attractive to the owners of Australian-flagged ships and, in particular, incoming overseas shipowners, and I want to go into that in more detail.

We know that if we are going to see an increase in the Australian flagged, owned and controlled coastal shipping industry it has got to be through overseas shipowners coming with their ships into our waters and wanting to have their vessels within our coastal passage trade. What is the particular impact of all this on my state of Western Australia? And, of course, Madam Deputy President Boyce, you would be well aware, as with your state of Queensland, of the importance to this national economy of the resources sector and the primary production sector in our states. Let me quote some figures just to put it into perspective for you. For Western Australia last year, 2010-11, overall production—and this is mainly from iron ore—in the Pilbara region was $57.4 billion of trade. For the offshore petroleum industry, and this is separate to the figures that I have just given you and principally out of the North West Shelf and the Pilbara, it was $23 billion last year and we know that that figure is increasing. If I look at the Goldfields-Esperance region, including gold but also other mineral commodities, I see it was $8½ billion last year. Those are all over vast distances within my state. If I look at the Midwest region based around Geraldton, I see a figure of $2.6 billion. But, with the construction of the Oakajee port and the opening up of the magnetite iron ore industry, the Midwest will be another Pilbara, so that figure of $2.6 billion will pale into insignificance as the magnetite industry gets underway. The only other figure to give you is from the Wheatbelt region. This is based principally on grain but there is also $1¼ billion of iron ore in the Wheatbelt region. That figure is $2.5 billion.

Why is all of this important? Because of the urgent need for us to have an efficient and competitive coastal shipping industry. We know at the moment of the congestion on the roads out of Perth because of the heavy haulage of massive sized equipment. The fact that, because of competition with other users of the road, these loads can only being shipped out of Perth at certain times adds immeasurably to the cost, reducing productivity and inducing delays. The weight of this sort of equipment—often 300 to 400 tonnes—moving on our roads causes damage to the rural road network. You can imagine the challenge associated with getting this equipment over bridges. In fact, it has to be jacked up and moved slowly over those bridges. We in WA, as with those in other states, have got a tremendous incentive to see a rebirth of our coastal shipping trade. Unfortunately, the legislation before the Senate falls far short of allowing us to achieve that.

Out of all this, what do we have? We have poor productivity and we have poor efficiency in the use of resources. So obviously we want to see, and we have the incentive for, so much of this go on to vessels at Fremantle or at Henderson or wherever they are assembled and to go by sea up to the Pilbara ports—or down to the port of Esperance—and to Geraldton et cetera. Unfortunately, we are not going to see it with this legislation because there are no incentives for overseas shipowners to bring their vessels into our waters.

It is my understanding that the legislation falls short particularly with regard to bulk cargoes. We know the circumstance that exists at the moment, that being the single-voyage permits that are available. Under this scheme they will be discontinued. When you have a look at what has occurred in recent times, the difficulty in being able to schedule cargoes further in advance is so obvious to everybody. Inaccurate vessel scheduling, port congestion, last-minute requirements for shipping, weather conditions—we all know the factors that are involved. What we need is legislation that accelerates and facilitates accommodation of the unnecessary or unexpected or unforeseen changes in vessel loadings, schedulings et cetera. The new legislation does not achieve this. It achieves something only on the basis of predicting well into the future what the demands are going to be. Then there is the associated administratively impossible task, from the shipowners', operators' or charterers' point of view, of actually making those changes. It is not obvious to me—and perhaps when the minister speaks he may be able to explain this to us—where the benefit comes of this bureaucracy and this inevitable added cost. I cannot see where it assists anybody.

It is certainly not going to assist an Australian coastal trader. Very often, if the type of vessel that is needed to be used—it might be a vessel for moving heavy haulage, so with a heavy crane, or whatever it is—is not available within our own coastal fleet, then of course an overseas-registered vessel will be necessary. So how it is going to be of benefit to have this long period of congestion and to have this bureaucracy is absolutely beyond me.

I know that the question of fuel—particularly the unavailability of fuel—has been addressed in some of the more recent negotiations. In the consultations that I understand are to come, I hope that matter will be addressed. If not, I hope it will be addressed through a MIM; but, again, we all know the difficulty associated with the on-time delivery of bulk fuel. I recall that, in running a fuel distribution business in Tasmania, more than once the so-called 'just in time' philosophy of delivery of bulk fuel into that state very nearly became 'just too late'. Certainly, trying to predict weeks or months in advance when they would need to schedule those cargoes would be fraught, I believe, with the associated administrative burdens.

I ask: what will the cost impact of this new legislation on customers be? Upon whom will the increased freight rates rest? Upon whom will the inefficiencies rest? And, of course, if there is a substantial move from road to sea transport—and I hope there is, if we can get it right—what will the cost impact on the trucking industry be? How will the trucking industry, drivers, TWU members and others relate? I cannot see how there will be anything other than an increased cost burden which will inevitably be passed on to customers.

The questions that I really want addressed are these. How does this legislation, as it is proposed, increase international competitiveness? How does it attract overseas shipowners to bring their vessels into our waters and have them Australian flagged? What benefits or advantages are there for them over and above those that they currently enjoy? How does the legislation address the past concerns, existing at this time, which have led us to effectively a decimated coastal shipping fleet of 20 or 22 vessels? I cannot see how this legislation is going to change that situation and make it attractive in the first instance to overseas owners or indeed in the longer term to Australian shipowners.

How will this legislation contain costs? Where are the cost savings to the end customer? We are all aware of the significant cost that is freight in our economy. We know what the impact of the infamous carbon tax is going to be on the cost of freight, particularly in my state, where distances are so vast. I was in Kalgoorlie, Karratha and Geraldton in the last 10 days. At the top of everybody's list in those places remote from the capital city is: what is the impost, the increased cost of freight, caused by the carbon tax going to be? If we see this movement, it will not change it.

I ask: how does this legislation reduce red tape? How does it reduce regulation? This Labor government has increased it and introduced new legislation, new regulations. I think the figures I have seen are that, in the term of the combined Rudd and Gillard governments, there have been some 16,000 new regulations to which business is subjected, with the removal of only 76. I want to know on behalf of the Australian people: in this legislation, where do we see a reduction of red tape? I cannot see it.

I want to know how the temporary licence system, to which I have referred, in any way increases productivity. Australia is absolutely in neutral and probably going backwards in its national productivity at this time—a time when its international competitors are actually increasing their productivity. These are the concerns that we should all be addressing in this place.

I ask about the industrial compact between the unions and employers: can somebody from the other side explain to me how that is going to increase productivity? How is it going to protect jobs in the industry? It has been said that this is not about seeing a diminution of incomes, salaries and wages; it is, however, about protecting and growing employment. And yet the legislation, as I see it, will have the opposite effect.

We see linkage to the International Transport Workers Federation, and I think that is to be applauded. Why, for example, in the legislation, do we not see the wages pegged to ITF levels? ITF internationally has a very, very generous wage system, and that of course is to be applauded. It is my understanding that a Filipino able seaman actually earns a higher salary than a general practitioner does in the Philippines, so ITF levels are obviously appropriate. Let us see legislation in place that ties these wages to ITF levels so that the fear of a wages hike after this legislation comes into existence can be allayed and put to rest.

I concur with those of my colleagues who say that before this legislation is passed, before it is imposed on the Australian people, it should be the subject of a Productivity Commission review. I am of the view that if this legislation is going to further diminish the importance of the Australian-flagged industry, as I suspect it will, if this legislation is not going to attract international shipowners to bring their vessels into our waters as Australian-flagged vessels, if this legislation is going to drive up the cost of freight to the end customer and is not going to take freight off roads and onto coastal shipping, then it is a waste of everybody's legislative time. It is therefore my point of view that the legislation in its current form should not be passed. It should be referred to the Productivity Commission so that we can get the view of an independent umpire before we proceed further.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I rise also today to speak on the Coastal Trading (Revitalising Australian Shipping) Bill 2012 and associated bills. The coalition recognises that the coastal shipping trade plays a vital role in Australia's freight task. For a variety of reasons, most related to the lack of cost competitiveness of Australian shipping, the number of Australian-registered vessels has declined over the last few years, and there are only 22 Australian-flagged ships operating today. The coalition is supportive of constructive measures to increase the number of Australian vessels internationally and the number used for coastal shipping. However, these bills carry a number of Labor trademarks that make it impossible to support the proposed measures.

As we on this side have come to expect from Labor, these bills have been poorly drafted, with minimal or no consultation with key stakeholders and, where consultation has occurred, with a lack of regard for the advice that has been put forward. These bills have a short implementation frame and they defy common sense. They will serve only to increase red tape and the regulatory burden for industry and the cost of freight. We are not convinced that the five bills that comprise the shipping reform package will stimulate growth in the number of Australian ships on our coast or maximise the use of Australian-flagged vessels.

One of the primary concerns amongst witnesses to the Economics Legislation Committee's inquiry into these bills was the lack of consultation with key stakeholders in relation to the impacts they will have on industry. The first draft of the Coastal Trading (Revitalising Australian Shipping) Bill was released for public comment just before Christmas last year; however, a major redraft was required, and a second version of the bill was released in February, together with the other bills comprising the package. This meant that consultation was undertaken for only a few weeks. Shortly thereafter, the minister introduced the package to the parliament—on 22 March 2012. The package that was introduced included new provisions that had not been contemplated in the initial consultation process. Despite this, Labor did not even see fit to complete another regulatory impact statement with department officials at the Senate inquiry. It was adamant that none of the many alterations arising from the redraft would impact the original RIS, but the evidence, both at the hearing and from the submissions, suggested otherwise.

The bills were referred to the House of Reps Standing Committee on Infrastructure and Communications and the Senate Economics Legislation Committee for consideration, but the House committee was given an extremely limited time frame to examine the bills and the Senate report, only tabled late last week, means that the House did not benefit from the Senate's advice prior to voting on the bills. A number of witnesses to the inquiry put on the public record their disappointment with this lack of consultation. Many witnesses said that they raised their issues and concerns directly with the department and the minister's officers, only to receive stony silence in response. Ms Margie Thompson, a member of the Australian Dry Bulk Shipping Users Group, which collectively accounts for 60 per cent of the coastal shipping task, told the committee that when her group tried to raise their concerns—and their concerns, certainly on their face, seem valid and substantial—they were simply told that the minister had set the policy direction and the department was trying to work the legislation around that. Apparently the minister knows better than Australia's primary users of coastal shipping! It is extraordinary to think that Labor would shut the door on the biggest users of coastal shipping in this country when devising a package of bills that will have such a dramatic impact on the industry. It is valid to ask: what is the purpose of the shipping industry? It is a service industry; it is not an industry that is there for itself; it is there to move freight and to do so as efficiently as possible. Efficiency and timeliness in moving freight have to be the primary concerns when looking at legislation that impacts on coastal shipping. Sure, there are other considerations, but ultimately the industry exists for the reason of moving freight, and that has to be the primary concern.

The lack of consultation is a common characteristic of this government and it is not the first time that the Senate Economics Legislation Committee has heard from witnesses about such concerns. 'The minister knows best' appears to be this government's default response when drafting legislation—until the eleventh hour, when we so often see those opposite scrambling to amend the unworkable as a consequence of their inability to listen to stakeholders and take on board the valid objections and concerns that were raised with them early in the process.

Another major issue raised by witnesses to this inquiry is that the bills are unlikely to meet their objective. To give some perspective on the issue, let me outline the size of the coastal shipping industry. The current market supports 17 Australian vessels that move Australian product around the coast—which is about 70 per cent of the total coastal trading market. Foreign vessels make up the remaining 30 per cent of the market, which is around eight ships. So we are talking about measures designed to foster a greater degree of Australian shipping activity in a market that already has 70 per cent. If it were possible to convert the remaining 30 per cent into Australian-flagged vessels, that would work out to around a further eight ships. That is what we are talking about. We are dealing with a very small industry in terms of coastal trading task, which, in the most wildly optimistic of predictions, could only expect to 'revitalise' the industry to the extent of an additional half a dozen to eight vessels.

It is also of particular concern to me that, when I asked officials from the department of infrastructure and transport at the economics committee inquiry about the effectiveness of the bills, they were reluctant to commit to any guarantees that the bills would actually revitalise Australia's coastal shipping industry. Department officials said it was difficult for them to assess exactly how many vessels would be added to the Australian register or how many companies would take up the incentives to boost the numbers of Australian-flagged vessels. Officials would only say that in their opinion this suite of bills 'provide an investment platform and strong regulatory basis for access to the coast'. This is hardly a satisfactory justification for the implementation of a rushed and sweeping reform package, and I am not the only one who thinks that—even the Labor senators in attendance at the inquiry were questioning the effectiveness and necessity of these bills. I am also disappointed that Hansard does not pick up pauses, because the long pause from department officials in response to my question, 'Are you confident that it'—that is, the number of Australian-flagged vessels—'will increase?' would be better described as a deafening silence. That question was finally answered with a repetition of the default position of the department that the package will provide a 'strong investment platform'. In the absence of department officials jumping up and down and telling me how wonderful this reform package is, I can only take it to mean that, no, they are not confident that this suite of bills will increase investment in Australian coastal shipping.

These bills will also increase red tape and the regulatory burden for both users of coastal shipping and industry participants. The bills abolish part VI of the Navigation Act 1912 and, in doing so, abolish the current permit and licensing system. Many companies have identified deficiencies in the temporary licence system established under the proposed act. The proposed scheme will require users seeking a temporary licence to carry out a minimum of five voyages per year, the details of which must be provided at the commencement of each year. According to the explanatory memorandum to the Coastal Trading Bill, a temporary licence will be issued for 'only those voyages where the required information is known, including expected loading and discharge ports and cargo type and volume'. This is a significant variation from our current situation under which two voyages a year are determined as being incidental and not requiring a licence. Of course, this determination was made by our current Prime Minister when she was 'minister for fair work'. How can the government possibly expect industry to provide such detailed information for an entire 12-month period in advance? The answer is that it cannot. Many submitters and witnesses to both the House and Senate inquiries said that it is simply impossible to forecast the movement of such cargoes over a 12-month period.

At the inquiry, Caltex argued that the minimum voyage requirement is not practical or reasonable and even went so far as to suggest that this could reduce transparency within the industry, because it would encourage shippers to include bogus voyages in their applications to meet the licensing requirements. But, as we all know, transparency is not of importance to this Labor government. Caltex and BP submitted to the inquiry that the changes to the licensing regime will also jeopardise Australia's fuel supply security by eliminating the flexibility to divert supply to meet emergency demand. It is incredible to think that, under these proposed bills, a fuel carrier could be forced to remain stationary for up to two days whilst bureaucrats decide whether it is permitted to change course to meet emergency supply of shortages to aviation fuel or petrol supplies.

Fuel companies have also highlighted that the proposed changes to licensing, which will see legs of journeys up for 'bid', will create safety risks in the transportation of flammable and dangerous goods. Sucrogen, a producer of sugar and molasses, also raised concerns in relation to the changes to the licensing regime because they could prevent it and other companies in Australia carrying their own cargo on their own ships. The transport of molasses, a product whose end use often results in consumption by humans, requires strict quality control and specific requirements. Sucrogen is currently able to ensure this quality control by using its own internationally flagged vessel, which it uses on the coastal trade, but may not be able to continue this practice under the proposed legislation. Not only does this defy all logic and common sense but also it could force such companies to cease coastal trading and instead export their goods to avoid this requirement. For example, instead of sending its molasses from Queensland to Victoria for processing, Sucrogen's evidence was that it might well find that, depending on how far around the coast it went, it would be marginal to continue the process of sending the molasses to other Australian areas for processing. It might become cheaper to send molasses overseas to be processed and to bring sugar directly from overseas into Australia—so there goes Australian industry and Australian downstream processing. The coastal shipping task would also be lowered, which is counterproductive to the overall purpose of these bills. The changes to the temporary licensing requirements can only be described as illogical and protectionist.

In addition to a significant increase in the regulatory burden, a number of submitters raised concerns about increased costs for coastal shipping and resultant job losses across manufacturing and industry. At a time when manufacturing and industry are struggling with a two-speed economy, a high Australian dollar and weak global demand and are facing the carbon tax, this Labor government wants to place further costs on the way manufacturing and industry transport their goods around Australia. The Australian Dry Bulk Shipping Users Group, who, as I have mentioned, carry 60 per cent of the current coastal shipping task, are so concerned by the impact these bills will have on their transport costs that they commissioned an independent report by Deloitte Access Economics, which confirmed that these bills would result in an increase to transport costs of at least 16 per cent. Shipping costs currently are around 30 per cent of the group's outgoings; now, just in time for the implementation of the carbon tax, this government is going to introduce legislation that will increase those costs further.

Already we have seen one global shipping operator announce its intentions to exit the coastal shipping market in Australia, with WWL announcing in May that it could not commit to engaging in coastal shipping after 1 July 2012. Like so many pieces of legislation, Labor is attempting to rush through the coastal shipping reform package without adequate consultation or consideration of the impact it will have on industry.

If we really want to work out how to revitalise coastal shipping in Australia and increase the number of Australian flagged vessels the logical path is to commission a Productivity Commission inquiry. Such an inquiry would investigate and address stakeholders' concerns and determine what impact these complex proposed regulatory changes would have on the Australian coastal shipping industry, the cost of freight and the cost to coastal shipping customers. It would also determine how best to proceed to ensure that we get an efficient and cost-competitive shipping industry based out of Australian which fosters increased activity. These bills should be rejected and the issue of the future of Australian flagged shipping should be sent to the Productivity Commission for further consideration.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

I have listened with some interest to the debate on the shipping reform package. My colleagues on this side have gone forensically through the details of the bills and have explained in the clearest of terms why these bills in their present form are not in the best interests of either the shipping industry or Australia generally. I note that the Senate Economics Legislation Committee inquiry report into these bills, which was tabled this morning, contained a recommendation by the committee's coalition members that the bill not be passed, contrary to what Senator Ludlam said earlier. I am not quite sure where Senator Ludlam was, in view of his comment earlier that the bills went through the Senate committee inquiry without any concerns being expressed—unanimously, I think is what he said. Clearly, almost half of the Senate committee was unhappy with the bills as they stood.

My interest in these bills relates to two industries in my home state of Queensland and to the workers who rely on those industries for their living. Senator Cameron made an impassioned speech earlier, no doubt more for the gallery than for the chamber, in which he said that everything the coalition does is with the intent of forcing down workers' wages and reducing their employment opportunities. Clearly, Senator Cameron's definition of working people is 'working people who vote for the Labor Party'—one of the 21 per cent of Australians who do vote for the Labor Party these days—'and who live in Labor Party electorates'. Clearly, Senator Cameron's concern for working families and jobs for workers does not extend to the state of Queensland or, in particular, to the sugar industry or the industries around the Gladstone area of Queensland. Curiously, both of those electorates do not have Labor members and are never likely to because the workers in those areas understand that the Labor Party is no longer interested in their future and in their employment prospects. I might say that the same applies to nearly every federal seat in Queensland, where the Labor Party has very few seats these days apart from a couple in inner-city Brisbane. Clearly workers in rural and regional Queensland—and I suggest in rural and regional Australia more generally—are concerned at Labor's approach to their employment and their future.

Two of the industries affected by this legislation—because it will add to their costs—are the cement industry out of Gladstone and the sugar industry of the Queensland eastern seaboard. It might be appropriate just to mention that Australia is the third-largest exporter of sugar in the world. There are some 6,000 canegrowers in Australia, with more than 4,000 farms growing sugar along the eastern seaboard of the country. The sugar industry directly or indirectly supports 40,000 jobs in Australia and underpins the economic stability of many coastal communities. In fact, it is a part of the social fabric that has woven itself through the development of coastal towns up and down the coast of Queensland.

As Senator Bushby just said, and as the evidence to the committee demonstrated, there is every prospect that with additional costs on the industry it will be incumbent upon the industry perhaps with a view to its long-term economic future to send molasses overseas for processing rather than using Australian workers in Australian mills, which it currently supports by coastal shipping around the coast of Australia to where the molasses is further processed. If the costs are the straw that breaks the camel's back, so to speak, of the sugar industry then not only workers in the coastal shipping industry but also those workers in the few manufacturing areas that still operate in Australia will be disadvantaged. There is the prospect—and evidence of this was given at the inquiry—of sugar being imported from Asia into Australia. You can imagine what that might do to this wonderful, very significant and longstanding industry, which employs, I repeat, over 40,000 people indirectly and directly along the east coast of Australia. While Senator Cameron says, 'Oh, yes, we have to look after the seafarers'—and we all want to do that—he also has to expand his horizons to see what might happen to the jobs of other workers in Australia. They will be put in jeopardy by the continual incremental increase in the cost of doing business in Australia.

Evidence was given to the Senate inquiry, I understand, by the cement industry. I do not have the figures—I was not actually at the committee—but I have been approached by those involved in the cement industry. Rather than manufacturing cement in Gladstone and shipping it to Townsville, just 600 or 800 kilometres up the road, using coastal shipping, it will become more economic across the board to use cement made in South-East Asia and trans-ship it to Townsville. The cost of shipping will be cheaper doing that. So again you put in jeopardy all of those hundreds of workers in the Gladstone cement industry. I just use that as an example. The same would apply in other cement factories around Australia.

In the fertiliser industry there is a concern that this legislation will increase red tape and, because of that, increase the cost of shipping around the Australian coastline, thereby putting to the margin those industries which still exist in Australia. I see Senator Kim Carr in the chamber representing the government at the present time. He more than most understands how Australian manufacturing industries are in peril at this present time. They are in peril because every increase in the cost of manufacturing in Australia puts those industries in danger of shutting down. We have already seen so many Australian industries move overseas. Many have moved because of the lack of productivity in the Australian workforce over many years. But, more importantly, they are now moving in droves because they understand that with the introduction of a carbon tax their costs are going to skyrocket, particularly when compared to the costs of manufacturing industries in our competitor countries.

This government looks after small groups of people. I understand that to stay in government Ms Gillard needed the support of the Australian Greens and therefore she continues to pander to their every wish. But where is her concern for the manufacturing workers that Senator Cameron spoke about so passionately—allegedly—with her introduction of a carbon tax, which she, Senator Carr and Senator Ludlam know will destroy what is left of Australia's manufacturing industries? That is apparently fine because it panders to the Greens' shut-everything-down philosophy on the Australian economy and it allows Ms Gillard to swan around the world—where is the latest conference being held, Rio?—and say she is introducing the world's largest carbon tax. She will go there and say, 'We are better than everyone else. We have a bigger tax than all the rest of you, so aren't we good?'

But why isn't she concerned about the jobs of Australians, or the jobs that used to be Australian jobs, which are rapidly and increasingly going overseas?

  This carbon tax, when it comes in in a few days time, will again add to the costs of Australian industry. Where is Ms Gillard's concern? Where is Senator Cameron's concern for the workers in the Bowen Basin and the proposed Galilee Basin coalmines? Are they concerned about that? They would answer by saying there are a lot of future investments on the drawing board in the mining industry and they are not worried about the carbon tax. I ask Senator Cameron, who brought up that ridiculous argument, to realise that mining executives can read opinion polls too, and any interest still being shown in investment in Australia by the mining industry is from those companies who are looking at the opinion polls. You do not have to be Einstein these days to read an opinion poll. They know there will be a change of government and the new government will as its first obligation on day one start the process of abolishing the carbon tax. Day two will be to remove the investment-negative minerals resource rent tax. The interest that there is in Australia's mining industry at the present time is from those international mining executives who can read and understand an opinion poll.

But, should the opinion polls be wrong and should this government continue after the next election, the jobs of so many miners in such a vast part of northern and remote Australia in particular will be put at real risk. That is why I am concerned about these bills before the parliament at the present time. The costs may not be a lot. I saw figures of costs going up 16 per cent. That was someone's estimate. It may not be correct. It may be more than that; it may be less than that. But any increase in the cost of doing business in Australia puts in great jeopardy those industries which have in the past made Australia so great and which have provided employment prospects for so many Australians.

My concern is for those industries that have in the past made Queensland so great—industries like the sugar industry, the mining industry and more recent industries like the cement industry out of Gladstone that currently contribute significantly not only to the economy of Central Queensland but to the economy of Australia as a whole. If these bills add to their costs and make them even more marginal, then their future is bleak and the future of the jobs of those workers is put in jeopardy.

This is why the second reading amendment moved by Senator Joyce is one that should be seriously considered. I know Senator Ludlam dismissed that and said, 'Don't not rely on our vote for that—it's not going to happen.' Perhaps he was as well informed on that as he was on the committee report when he said it was a unanimously supported report. I would ask Senator Ludlam to consider: what is the harm in asking the Productivity Commission to have a look at it? Perhaps what I have said about the sugar industry and the cement industry will not come to pass. Perhaps the calculations done for those industries are not precise. Perhaps in some areas they have worked on the basis of the wrong parameters. But certainly there was a wealth of evidence before the Senate Economics Legislation Committee that suggested there would be an increase in costs from the red tape and from the uncertainty that will follow the adoption of this bill. If there is anything that puts the sugar industry, the cement industry, the mining industry or other industries at risk, then it should be carefully considered. That is why Senator Joyce's amendment for the referral of this matter to the Productivity Commission makes a lot of sense. What harm can it do?

These bills, as other speakers have said, were a long time coming. They were supposed to be 'reform'. I use that word in inverted commas because, as Senator Bushby well said, after the departmental officials were asked about the extent of the reform or the rapidity of the reform there was an embarrassing silence. So these bills are not going to 'reform' the industry overnight. Why not send the bills to the Productivity Commission? These are people who are well skilled, honest, independent and who do not stand to gain or lose one way or the other. They are people whose ability and skill is in looking at this type of legislation.

I do give the government credit for these bills in that I think they were trying to do something positive. I think they were trying to improve the situation across the board. But again, as I said in relation to Senator Cameron's contribution, it is no good just looking after one small part of the workforce if in doing that you are going to put in jeopardy the jobs, the employment and the future prospects of an even greater number of workers and industries whose livelihoods depend on these industries keeping going. These industries, as we have seen so much in recent times, will not be able to continue to compete against those of our neighbours. The carbon tax—and I do not think any sane person can disagree with this—will send more and more Australian jobs offshore. Our manufacturing industries, as Senator Kim Carr knows better than anyone else, have been faltering for decades now. The increased cost of power with the new carbon tax—the increased cost of doing absolutely anything—will exacerbate the move for Australia's manufacturing industries overseas.

I just plead with senators not to let this bill and the Australian coastal shipping trade in all of its forms add to those cost pressures which will send Australian jobs offshore. It seems to me perfectly reasonable for the Senate or indeed the parliament to ask the Productivity Commission to have a look at this legislation, to see whether this bill as it stands would 'reform' Australia's shipping industry or whether it perhaps would not do such reforming but would destroy other Australian industries and jobs. That is why I urge the Senate to oppose the bill as it presently stands and to support Senator Joyce's second reading amendment to let the Productivity Commission have a good look at this and give us some really professional, independent advice on the right way to go.

Kim Carr (Victoria, Australian Labor Party, Minister for Human Services) Share this | Link to this | Hansard source

I take this opportunity to thank senators for their comments and their contributions to this debate on the five bills that are before the chamber, comprising the government's Stronger Shipping for a Stronger Economy legislative package. These bills represent the most significant reform of the Australian shipping industry in nearly 100 years. These reforms are designed to address the 40 per cent decline in the Australian fleet over the last decade by providing Australian companies with an internationally competitive fiscal and regulatory regime to encourage investment in the Australian shipping industry. In short, this is a package of measures designed for the modernisation of the Australian industry by concentrating on the economic fundamentals of the industry and ensuring that we concentrate on productivity, innovation and the development of high-skill, high-wage jobs for Australians in the industry.

It stands in sharp contrast to the position taken by those opposite, which is to take the low road, to race to the bottom, to see the whole issue of competitiveness in terms of the reduction of wages and conditions for working people. This measure provides for Australian vessels paying Australian wages and conditions. It provides for jobs for Australians to be given preference. However, these new licensing arrangements do not close the coast to foreign ships. The government recognises the legitimate role of foreign-registered vessels in our domestic shipping industry and they will continue to have access to the coast, subject to Australian vessels being given the opportunity to determine whether they are available to undertake the trade.

The bills provide for open and transparent decision-making processes. They provide for flexibility in terms of variations in existing licences. Based on a collaborative approach with industry, the bills provide opportunities both for major companies and for workers to enjoy the benefits of ensuring that Australian industry is competitive while based on proper wages and conditions.

There is of course a matter of national interest here. Ninety per cent of Australian exports by volume are carried by sea. We are the fourth largest sea transport mission in the world. Incredibly, however, Australia has only four vessels participating solely in the international trade. So now is the time to take action to increase Australian participation in the international trade, and that is what this package of measures does.

Time is short, and I think there has already been very lengthy discussion on these bills. I will not delay the Senate other than to say that we would like to thank the Economics Legislation Committee for its consideration of these measures. We would like to acknowledge the fact that the committee has made recommendations that have led to a compact between employers and unions being finalised last month. These are bold reforms. They are consistent with the committee's recommendations, and the government is very proud of these achievements to ensure the protection of Australia's vital interests.

As to the second reading amendment being proposed by Senator Joyce, the government does not support such a measure. It is the same amendment as that proposed by the Leader of the Opposition. It is quite a disingenuous approach. It is not a question of having yet another inquiry; it is a device to delay, at a time when the industry needs certainty and needs to be able to move forward with confidence. This amendment is being proposed by the conservative forces in this parliament, continuing the status quo of an unlevel playing field for Australians and for Australian shipping vessels. We want to ensure that the industry has the confidence to proceed, that new investment is attracted and that we are able to proceed on the basis of innovative processes to ensure that high-skill, high-wage jobs are provided. If Senator Joyce had been confident of the Productivity Commission's bona fides, perhaps he would not have advised us to use its reports in the manner in which he has in recent times. Perhaps they are a bit rough for that purpose as well! His is clearly a view that we can hardly take as being a sincere and genuine approach, given that he suggested these reports be used as toilet paper.

John Hogg (President) Share this | Link to this | Hansard source

The question is that the second reading amendment moved by Senator Joyce be agreed to.

John Hogg (President) Share this | Link to this | Hansard source

The question now is that the bills be read a second time.

Question agreed to.

Bills read a second time.