Back to All News

Shipping Reform (Tax Incentives) Bill 2012, the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012 & the Coastal Trading Bills

Speeches in Parliament
Scott Ludlam 18 Jun 2012

Senator LUDLAM (Western Australia) (10:35): 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 it is important, and 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, and 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 that 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.


Back to All News