Wednesday, 13 September 2017
Coastal Trading (Revitalising Australian Shipping) Amendment Bill 2017; Second Reading
That this bill be now read a second time.
The Australian government is committed to ensuring safe, secure and efficient coastal shipping as part of Australia's national transport system.
As part of this commitment, I am pleased to introduce the Coastal Trading (Revitalising Australian Shipping) Amendment Bill 2017.
Between 2010 and 2030 Australia's overall freight task is expected to grow by 30 per cent but coastal shipping is only expected to increase by 15 per cent. With Australia's extensive coastline and broad network of ports, there is scope for this figure to be much greater.
However, it is clear that the current regulatory system does not fully support that potential being realised.
Following my appointment as minister, I have engaged with stakeholders in the coastal shipping sector, Australian operators who use the coastal shipping and Australian seafarers.
The stakeholders I have spoken to all agree there are aspects of the current Coastal Trading (Revitalising Australian Shipping) Act 2012, known as the 'coastal trading act', that are unreasonably limiting, inflexible or onerous.
These restrictions are limiting or preventing the use of shipping to move domestic freight. They are pushing costs up for businesses. It is an important part of the government's red-tape reduction work to ensure legislation in place is being effectively implemented and not imposing excessive administrative burden.
This bill makes amendments to the existing regulatory regime, rather than fundamentally restructuring it.
These amendments were set out in a discussion paper that I released for industry consultation in March this year and received significant support from stakeholders.
The Australian Aluminium Council, in its submission in response to the discussion paper, said:
'These amendments would reduce the regulatory burden for shipping users and increase the efficiency of the coastal shipping regime'.
In its submission Manufacturing Australia said:
'The proposed amendments are pragmatic, achievable and likely to deliver a material benefit in lower costs for Australian manufacturers'.
Turning to the amendments in detail, under the coastal trading act applicants must specify a minimum of five voyages they intend to undertake in order to secure a temporary licence.
I'm aware of one instance where a shipper was unable to obtain a temporary licence to move a piece of heavy machinery between two ports as it required only a single voyage and was therefore ineligible for a temporary licence.
The machinery was then instead moved by road, which required a police escort due to the size of the machinery, and overhead utilities had to be moved.
This was far more complicated and more costly than a voyage by ship would have been, but it was the only option available.
This bill removes the five-voyage requirement, increasing flexibility for industry.
The coastal trading act contains strict tolerance provisions for voyages under temporary licence that do not reflect the daily realities of how the shipping industry and supply chains in Australia operate.
The tolerance restrictions mean that a shipper has to apply for a variation to their temporary licence if they are going to move their cargo more than five days before or after the approved loading date or if they need to load 20 per cent more or less than the approved amount of cargo.
Such strict limits fail to reflect the fast-paced nature of the shipping industry.
For example, I'm aware of an Australian company which received a last-minute request from a customer for 2,000 tonnes of cargo to meet a customer shortage.
Despite already holding a temporary licence to carry 8,000 tonnes of cargo on a similar route, the ship it had chartered had to wait an extra day in port for a variation to come through, at a cost of US$15,000 in port costs.
Every time delays and costs like these are incurred by business, it impacts on profits and puts Australian jobs at risk.
The amendments in this bill relax the tolerance provisions to provide businesses with the flexibility and certainty they need to operate profitably.
This bill will also simplify the consultation provisions of the act, while not removing the protections that all general license (Australian) vessels currently exist.
All general licence holders must be consulted for a minimum period of either one or two days before any temporary licence is granted, or approval for any new voyage is granted.
That is mandatory even where there is no general licence (Australian) vessel capable of carrying the cargo or passengers the applicant wants to move.
For example, there have been no crude oil or petroleum tankers operating under general licence conditions since June 2016. However, the consultation requirements have resulted in the absurd situation where industry has spent 446 cumulative business days since 1 June 2016 waiting for consultation with a general licence holder that does not exist.
This bill will streamline the application by removing the requirement to consult when there is no general licence vessel that is able to carry the cargo or passengers.
The changes I'm introducing today will also extend the geographical reach of the coastal trading act, to support the Australian energy sector.
The current coastal trading regime is hindering the use of Australian crude oil and condensate products in Australian refineries.
The Australian Institute of Petroleum told me earlier this year that uncertainty over the status of oil tankers moving between floating production storage and offloading units and floating storage units and mainland Australia actively discourages the use of Australian crude oil and condensate in Australian refineries.
This bill will enable voyages occurring between a floating production storage and offloading unit, or a floating storage unit, and the mainland to be covered by a coastal trading licence.
This bill will also allow vessels undergoing dry-docking to be covered by the coastal trading licensing system.
Under current arrangements, vessels undertaking scheduled maintenance in dry-docking facilities are subject to importation under the Customs Act 1901.
Covering vessels undergoing dry-docking in the coastal trading licensing system will provide certainty to operators and potentially increase the use of Australian facilities.
The amendments also change the voyage notification requirements by removing the need for industry to submit a notification when none of the voyage details have changed.
The bill will require ships to provide their International Maritime Organization number rather than their name as an identifier.
Ships are able to change their name—having the IMO number of vessels operating in our waters will improve the government's ability to verify that operators are complying with the requirements of this and other Australian legislation.
The Turnbull-Joyce government has a vision for a simpler and more flexible costal shipping industry that is positioned to meet an increased share of Australia's freight task.
This bill removes some of the red tape and unnecessary administrative burden that the current legislation has imposed on the coastal shipping sector.
I commend the bill to the House.