Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Hansard source

For an island nation such as Australia, our maritime industry is a vital part of the national and international transport network. Australia is a trading nation with a relatively small domestic market. We depend on our overseas markets to maintain our national prosperity and lifestyle. Even though our country, in spite of the resources boom, is enduring embarrassing monthly trade deficits we still export far more in volume than we import. The importance of shipping to Australia's international, interstate and intrastate trade is therefore significant.

Sea transport carries over 99 per cent of international cargo by weight and about 75 per cent by value, and domestically ships carry around 26 per cent of our freight. With the domestic freight task set to double by 2030, action must be taken to ensure the viability of shipping services. While a strong national flag shipping industry is vital, it is even more important that the shipping services in Australia are viable and competitive, including with domestic road and rail freight services.

As the Minister for Infrastructure and Transport said, Australia's shipping industry has been uncompetitive and in steady decline, dropping from 55 vessels in 1995 to 22 today. Shipping has also been losing its share of the domestic freight task at a time when we need more cargo to be carried by ships to take pressure off our roads. Shipping has the ability to move large quantities of cargo across long distances, the benefits of which are obvious in such a large island nation as Australia. We need efficient general freight shipping from port to port, especially between our capital cities, if we are to meet our future transport needs. Traditionally, Australia's shipping industry has been uncompetitive internationally because of the higher cost of running an Australian as opposed to a foreign flagged vessel. Australian ships have been known for having notoriously high manning levels, restrictive work practices and wage structures compared with the rest of the world.

The coalition is committed to the sustainable growth of Australia's shipping industry by ensuring that the maritime sector is as safe, competitive and efficient as possible. The reforms announced by the minister on Friday include little detail on how the proposed measures can deliver what is promised. To quote from Shipping Australia:

Much will depend on the detail of how the reforms are enacted whether that objective will be achieved. The details of the criteria for the second register and the training packages as a result of the establishment of the forum to develop skills and training in the industry, are some of the issues on which we are waiting further details.

Similarly, the Australian Shipowners Association has said:

The detail that sits behind these measures is critical and we look forward to seeing the draft legislation in the near future.

The coalition, too, looks forward to seeing the draft legislation.

Knowing how beholden the minister and Labor are to the Maritime Union, the Australian shipping industry has every reason to be suspicious about the so-called reform package. While it promises benefits to some shippers, everything will depend on the undisclosed detail and the accord being proposed between shippers and unions. The effective abolition of single voyage permits except in times of national emergency has the potential to make domestic freight movement by ships between Australian ports even less competitive. However, the precise impact on industry will depend on the detail of the legislation, which is yet to be released. The criteria for the temporary licence regime which will replace single and continuing voyage permits will be important to determine how flexible the regulations will be. Whether the temporary licence will apply to particular vessels or ships within a fleet is unclear. Should it apply to a specific vessel, this will hamper flexibility where Australian flagged ships are unavailable or inadequate for the task.

It will be important to consider the impact of these reforms on the cost of freight and their impact on flexibility around our coast. Wage and industry subsidies in one sector must not be allowed to destroy jobs and close industry in another sector. I understand that the industrial compact negotiations to make our shipping industry more productive and efficient are just beginning between the union movement and the broader shipping industry. These negotiations will need to be groundbreaking to ensure the viability of Australia's shipping industry. If there is any retreat to the bad old days of the past, no amount of government subsidy or intervention will save the industry. I am assured that the industry and the union movement are aware of the importance of the efficiency compact.

I am informed that a typical Australian container ship pays $4.06 million in crew costs per year compared with a foreign ship, which pays just $1.65 million in crew costs. Cost pressures are critical. Right now sugar is being shipped from overseas direct to southern ports because it is cheaper than shipping it from north-eastern Australia. The upward pressure on costs will also be compounded by the carbon tax. Under the 6.21c per litre slug on coastal shipping fuel as a part of the carbon tax regime, everything being shipped by Australian vessels will be more expensive, but if you want to ship those same goods in from overseas they will not incur this tax. The decision to grant more generous income tax and depreciation arrangements will be welcomed by seafarers and the Australian shipping industry but this gesture will undoubtedly encourage other Australian industries facing international tax disadvantages to demand similar concessions. Those industries would have a fair case. If it is good enough for the shipping industry then why not for car manufacturers, the tourism industry or food producers? If seafarers' income earned offshore is tax free why isn't the income for other overseas workers tax free? In 2009 this Labor government changed the taxation arrangements for Australian workers working overseas for 91 days or more to make these people pay income tax in Australia. Now they are doing exactly the opposite for seafarers.

Additionally, in relation to depreciation and company tax, Qantas and other Australian airlines face massive competition from airlines based in low-tax countries or countries where they receive special government concessions or depreciation arrangements. For example, in Australia the effective life of an aircraft for depreciation purposes is 10 years but in the case of many foreign airlines the effective life is five years or, in some cases, three years. Company tax rates for airlines in competitor countries like Singapore, Malaysia and China are significantly lower than those faced by Australian carriers. In the case of the UAE, which has two of the biggest competitors for Australian airlines on our routes, there is no income tax at all.

The minister said that all of the measures that he has announced today are fully costed and have been offset but there has been no detail provided of what the costs are or what cuts are being proposed to fund these changes. So there is a lot more detail that will have to be provided before anyone can make a reasonable judgment about whether this package is fair, whether it will achieve its objective and what the flow-on implications might be to other industries in Australia that might be placed at a competitive disadvantage by the assistance being provided to shipping.

The coalition is committed to reform which will revitalise the Australian shipping industry. However, it is important that we see the detail of the reform package so that it is possible to assess the real impacts of the proposal. Australians are tired of overblown, grand announcements with no detail, designed to take our minds off the other government failures and scandals. Industry will certainly need to see the details before it can be confident that these announcements will make any real difference.

I welcome the fact that the minister has reported on this issue to the parliament but we look forward to hearing much more about the detail of the various proposals so that they can be assessed fairly on the basis of all of the facts.

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