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

On behalf of Senator Tyrrell, I present additional information received by the Select Committee on the Tasmanian Freight Equalisation Scheme.

Bridget McKenzie (Victoria, National Party, Shadow Minister for Infrastructure, Transport and Regional Development) Share this | Link to this | Hansard source

I move:

That the Senate take note of the document.

Well, for nearly two years the Albanese government has stood by while Tasmania's producers, exporters and families have been punished by high inflation, rising shipping costs and a freight equalisation scheme that hasn't kept pace with modern freight realities. The Labor government, under Anthony Albanese, has ignored repeated calls from Tasmanian industry bodies, including the Tasmanian Logistics Committee and the Tasmanian Farmers and Graziers Association. The Labor government has allowed shipping and logistics cost pressures to compound under its economic mismanagement, and this has led to unfair cost burdens for Tasmanian primary producers and manufacturers under the Tasmanian Freight Equalisation Scheme. It means they are unable to compete fairly against mainlanders when it comes to exporting their high-quality goods.

The Tasmanian Chamber of Commerce and Industry has said that a properly functioning scheme is vital to ensuring that Tasmanian businesses can continue to participate in increasingly competitive national and international markets. Its CEO, Michael Bailey, has said that the scheme is plagued by restrictive timeframes and 'weird anomalies'. Cabinet-makers can claim for wood coming into Tasmania but not for things like hinges and door handles, which really impacts their profitability. Cherry grower and president of Cherries Tasmania Orchards Nic Hansen believes the scheme was good 25 years ago but has not seen it change in that time, and it's no longer fit for purpose. He said:

It costs us 50 per cent extra to send a pallet of fruit from here in Grove—

in Tasmania—

to Melbourne than it does from Melbourne to Hong Kong

So this scheme is a fundamental pillar in an equity arrangement to ensure that Tasmanian producers and manufacturers can compete on an equal footing against their mainland cousins.

The coalition recognises Tasmania's unique geographic position and the critical importance of freight and passenger transport to the state's economic future. Our Tasmanian team has been fighting for changes to that scheme for some time, and I would like to pay tribute to the Liberal candidate for Braddon, Mal Hingston; the Liberal candidate for Lyons, Susie Bower; and the member for Bass, Bridget Archer—three people who have championed reform of this scheme on behalf of their primary producers, their small businesses and manufacturers, and, indeed, residents in Tasmania who want to see changes to the passenger vehicle equalisation scheme as well.

Recently, I had the pleasure of joining Peter Dutton to visit Grant and the team at Spreyton Cider Co., who've been experiencing the same problems faced by many growers, manufacturers and businesses in Tasmania. We were able to make the commitment that, within the first 100 days of a newly elected coalition government, we will be reviewing the Tasmanian Freight Equalisation Scheme, as was recommended by the select committee. We will also expand that review to cover the Bass Strait Passenger Vehicle Equalisation Scheme. Whilst that review is being undertaken, while it is examining the issues raised throughout the Senate select committee's inquiry, we understand that exporters in particular will still be subjected to an unfair regime. That's why we've put interim assistance to the tune of $62 million on the table to support Tasmanian businesses whilst we undertake that urgent review of this scheme, because we know this scheme is not fit for purpose; we have heard the concerns of Tasmanian businesses, manufacturers and primary producers; and we want this scheme to be futureproofed so that, going forward, it will no longer be a political football to be used to the detriment of businesses on the island.

The industry have advised that the calculated freight cost disadvantage and increased intermodal costs are driving them to the wall. If we're serious about supporting them, we need to address the issue that Labor, through the increased cost pressures, increased energy prices and increased input costs across the board, have been impacting Tasmanian businesses. This concerns both northbound and southbound freight. We also want to look at the freight issues between the Flinders and King islands and Tasmania itself. We want to ensure that this scheme is fit for purpose, and this review will be done urgently if we are successful at the next election.

Peter Dutton said a coalition government will ensure the two schemes are fit for purpose, and he acknowledged that Anthony Albanese has stood by and done nothing while Tasmanian businesses have been punished by Labor's high inflation and rising shipping costs. We know the coalition has a strong track record of ensuring Tasmanian businesses and farmers aren't disadvantaged in selling their goods interstate or exporting to the world, and we plan to continue that.

This scheme was set up to ensure that Tasmanian businesses could compete equally with mainlanders. The objective of the scheme is to ensure that, as freight crosses both sides of Bass Strait, Bass Strait is treated like any other highway in our national highway network. Over recent years, we know that hasn't been working for Tasmanian businesses, and they're rightly frustrated, and that's why we are going to urgently put the issue through an independent review and fix this inequity once and for all. It's equally important that the review consider the design and settings of the Bass Strait Passenger Vehicle Equalisation Scheme because many Tasmanians use that service to access the mainland for education opportunities, to connect with family and friends and, importantly—and increasingly, sadly—to access critical medical services.

We want to ensure a fair go for Tasmanian industries as part of our plan to deliver a strong and secure economic future for Tasmania and to get our country back on track. We will also be exploring, as part of the review, the model commercial environment facing Tasmanian businesses and ways to cut red tape and make the scheme simpler and more responsive. We've heard from businesses that the paperwork associated with the scheme is onerous and there are much swifter and easier ways to ensure businesses can access the support under the scheme in a timely manner.

Many Tasmanians depend on the ferry system, the Bass Strait Passenger Vehicle Equalisation Scheme, particularly those who are older and who don't appreciate flying. The design and the operation of the Bass Strait Passenger Vehicle Equalisation Scheme must work for people, not just for those who can afford what is often an unaffordable airline ticket. These schemes were established because Bass Strait shouldn't be a barrier to opportunity. It shouldn't be more expensive to move things across Bass Strait than on any other major highway across the country.

Communities in Tasmania are telling us that the scheme is outdated by its design, is too slow in reimbursement and is misaligned with the real costs of intermodal freight in 2025. It's time to give Tasmanian world-class producers and exporters a fair go. That is what Susie Bower is fighting for, that is what the Liberal candidate for Braddon, Mal Hingston, is fighting for, and that is what the Liberal member for Bass, Bridget Archer, is fighting for. Only votes for the Liberal candidates in Lyons, Bass and Braddon will deliver the reforms that the Tasmanian Freight Equalisation Scheme needs not just to fix the disincentive and the inequity that exists right now but to futureproof the scheme in coming decades so it can no longer be used as a political football by different sides of politics. If the Labor Party were serious about backing Tasmanians—if Anthony Albanese was serious about backing Tasmania's potential as a producer and exporter of world-class product, he would be reforming this scheme and giving Tasmanians a fair go.

Claire Chandler (Tasmania, Liberal Party, Shadow Assistant Minister for Foreign Affairs) Share this | Link to this | Hansard source

I also rise to provide a brief contribution in response to the tabling of additional information for the Senate committee report on the Tasmanian Freight Equalisation Scheme. This was an incredibly important inquiry, and the report in relation to it demonstrated very clearly that the Tasmanian Freight Equalisation Scheme, the TFES, is not fit for purpose, and the degradation of the scheme over the last three years, in particular, has been putting Tasmanian businesses at a severe disadvantage. That is why the coalition has announced that we will commit an immediate $65 million to support Tasmanian industry and address the increased costs of transporting products to and from Tasmania and the mainland.

While the Albanese government has sat on its hands and allowed Tasmanian businesses, consumers and travellers to pay the price for rising costs, the Dutton led coalition is acting. The announcement by Peter Dutton has been warmly welcomed by Tasmanian businesses and industries over the last few days. The Tasmanian Chamber of Commerce and Industry said the coalition's announcement was 'a fantastic outcome for Tasmanian businesses'. CEO Michael Bailey said:

The TCCI along with the Tasmanian Fruit Growers Association and a range of other businesses have been calling for action on the TFES and it's great that the Coalition has been listening.

Mr Bailey went on:

Tasmanian exports to the mainland and overseas are valued at more than $26 billion each year. The businesses that produce those exports employ thousands of Tasmanians and support hundreds of communities right around the State. This commitment will back in those businesses, secure jobs and support those communities.

Over the last few years, I've engaged with Tasmanian fruit growers, farmers and many incredible Tasmanian businesses who use our fresh produce to make high-value products that are then sold all over the world. They've all told me how the degradation of the TFES is putting their businesses at risk. You cannot have Tasmania producing billions of dollars of world-class fresh produce and then make it punitively expensive to get that produce to the millions of people around the world who want to buy it. This select committee heard time and time again that that is exactly what has been happening in recent years. As my colleague Senator Colbeck and I said in our additional comments to the report:

It is not acceptable for Tasmanian businesses to be disadvantaged because the support provided by the TFES is falling behind the necessary levels of support.

We went on:

Liberal Senators on the committee support the work done by the inquiry and are convinced that the outcome must be urgent modernisation of the TFES to meet the current and future requirements of Tasmanian business and industry.

This report was finalised and released late last year—2024. We are now a third of the way through 2025 and the Albanese government is yet to make any changes to respond to what is clearly an urgent need to support Tasmanian growers and producers.

The agreed committee report signed up to by Labor senators on the committee calls for a review of the TFES. The coalition supports the review taking place, but we have been clear that we feel that doesn't go far enough. That is why we have announced an immediate increase of $65 million in funding to reduce the costs for Tasmanian businesses and travellers. That money will flow immediately into the scheme without needing to wait for another review to be completed. But where is the government on this? They have had months to announce immediate responses and put in additional investment to support Tasmanian businesses, and yet they have done nothing. As the opposition leader said in Spreyton last weekend:

Mr Albanese has stood by and done nothing while Tasmanian businesses have been punished by Labor's high inflation and rising shipping costs.

He also said:

Tasmanian producers and businesses are responsible for some of the finest foods and products. The ability to get these products to markets around Australia and the world is critical to sustaining and growing jobs in Tasmania, and underpinning investment in key industries.

Peter Dutton understands the importance of this scheme to Tasmanian businesses and to Tasmanian manufacturers, as do the member for Bass, Bridget Archer, and our federal candidates: for Braddon, Mal Hingston; for Lyons, Susie Bower; for Franklin, Josh Garvin; and for Clark, Marilena Di Florio. Of course, over many years the Tasmanian Liberal Senate team have been strong supporters of the Tasmanian Freight Equalisation Scheme and have helped secure improvements to the scheme on many occasions, just as we did this weekend just gone.

Credit goes to the chair of the committee, Senator Tyrrell, for initiating this inquiry and for her comments on the call for action and not just another review. That is precisely what the Dutton coalition's $65 million commitment to Tasmanian producers and farmers is all about.

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

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

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

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

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

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

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

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

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

Leave granted; debate adjourned.