Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

For the information of the House, I have advised the Leader of the Nationals, who is responding to my ministerial statement, that we would come in at a later time today. I have advised his office, and they said that it was okay and that he will be here to respond to the statement.

I seek leave to make a ministerial statement relating to Stronger Shipping for a Stronger Economy.

Leave granted.

Today I report to parliament the Gillard government's plan to revitalise the Australian shipping industry, the most comprehensive reform of shipping in Australian history. The process of developing this policy began with the House of Representatives Standing Committee on Infrastructure, Transport, Regional Development and Local Government inquiry into shipping. In October 2008, the committee tabled its report Rebuilding Australia's coastal shipping industry. I acknowledge the work of the committee chair, the member for Ballarat, the Hon. Catherine King, and of the deputy chair, the member for Hinkler, Paul Neville, who worked on this unanimous report.

In February 2009, I formed an advisory group of industry leaders to help us work out how to implement that report. On 1 December 2010, I released a discussion paper that proposed important reforms and invited submissions to be provided by the end of January 2011. In January this year I established three industry reference groups to consult and provide advice to the government on the taxation, regulatory and workforce elements of the reforms. Members of those groups represent the breadth of the maritime industry: ports, the bluewater and offshore sectors, regulators, unions and training providers. All that hard work and consultation has gone into producing the reform package that I am outlining.

The need for reform

There are sound economic, environmental and security reasons to revitalise our shipping industry. Everyone in Australia knows that we are currently experiencing a once in a generation resources boom. They understand that the nation's prosperity is linked to the world needing and wanting our resources. What many people do not know is that 99 per cent of Australia's international trade is carried by ships, yet only one half of one per cent of that trade is carried by Australian flagged vessels. Our ports manage 10 per cent of the world's entire sea trade. $200 billion worth of cargo is moved annually. We are the largest island nation and the fourth largest shipping task in the world. Yet there are only 22 Australian registered major trading ships plying our waters today—down from 55 ships in 1995. Of the remaining ships, only four—all gas tankers—are dedicated solely to international trade.

On top of this, a lack of investment means 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. We all know that the newer vessels are safer, more energy efficient and better meet the needs of modern shipping. 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 with employers reporting that half of their seafarer workforce is aged over 45 years. To compound the problem, attracting new recruits and building a strong and sustainable skills base has been hampered by the high cost and complexities of existing training structures. At the same time, participation in the domestic freight task is also at an all time low. All this adds up to lost economic opportunities and environmental and security risks to our nation.

The Gillard government is determined to remove the disincentives that have made it uneconomic to operate Australian ships in a global environment. We are determined to create a policy framework that will encourage and sustain growth and productivity in our shipping industry. There are five elements to the reform package:

These reforms are fully costed and have been offset according to our strict fiscal principles.

Tax reforms

The tax reforms include five measures and are linked to being Australian flagged.

Australian international shipping register

We will establish an Australian international shipping register to help Australians participate in international trade by addressing the cost disadvantages experienced by our registered vessels when competing internationally. Vessels on the international register will be Australian flagged. When they undertake an overseas voyage they must provide the crew with terms and conditions in line with the Maritime Labour Convention.

When Australian international shipping register vessels work domestic coastal routes, all crew, irrespective of nationality will be covered by the Fair Work Act. The same environmental, safety and occupational health and safety standards will apply to these vessels as apply to first register vessels. To further support the industry, international register vessels must employ a minimum of two Australian crew, preferably the Master and the Chief Engineer.

Cabotage

The reform package also fixes the weaknesses of the current permit system. Permits are too easy to obtain. There are no incentives to encourage a long-term commitment to working the Australian coast. The shipping reforms provide clarity and transparency to shippers and operators and enable them to plan long term.

The new licensing regime will support Australian shipping and set clear boundaries around the necessary role of foreign vessels in our coastal trade. Licensing requirements and conditions will be set clearly in legislation, giving certainty and clarity to all operators. There will be a three-tier licensing regime:

A period of five years will be provided to existing licensed foreign flagged vessels to transition to Australian flagged.

Workforce skills development

The fourth element of this reform package is workforce development. In order to have a strong, safe and clean shipping industry we must attract, train and retain a skilled seafaring workforce. This was strongly identified during the review of coastal shipping; a review which had bipartisan support.

The government has already been doing its bit in this area. In July 2009 we provided the Australian Maritime College in Launceston with almost $4 million in funding for a new state-of-the-art maritime simulator to help deliver training in coastal navigation. This simulator is now something of an attraction and has already had visitors from Chinese, Japanese and American maritime educators. In February last year we provided the college with more than $2 million to deliver vocational education and training.

To further assist the shipping industry, I am setting up a maritime workforce development forum with experienced people from industry, unions and the training sector. The forum will address areas that are fundamental to building shipping skills. These will include a workforce plan for the medium term to address issues including the ageing workforce and the most immediate skills gaps. I expect the forum to work hand in hand with the proposed National Workforce and Productivity Agency, AMSA and training providers.

Industry compact

The final element of the reform package is labour productivity. We are committed to aligning Australian productivity practices with the best in the world. The government supports a compact between industry and unions which includes changes to work practices, a review of safe manning levels and the use of riding gangs on coastal vessels. I can inform the House that negotiations between industry and the unions are progressing.

2012 start date

When I announced the government's election commitment to revitalise Australian shipping I said it would be in place by mid-2013. However, in the time we have been working on this major reform package we have seen more vessels leave our shores. The need to arrest this decline, combined with strong support that industry has shown for these reforms, has convinced the government to bring forward this reform.

I can now advise the House that the shipping reforms will commence 12 months earlier, on 1 July 2012. This is a huge reform agenda and clearly shows the government's commitment to revitalising Australian shipping. It makes no sense, no sense at all, for Australian trading to take place almost entirely in the hulls of foreign ships. We need to become participants, not just customers. We need to be a shipping nation, not just a shipper nation. We need to upgrade the fleet. We need to get the regulatory framework right. We need a best-in-class tax system for shipping and we need a pool of skilled seafarers to operate the ships of the future. These reforms will confirm that Australia's long-term economic, environmental and security objectives are met by a revitalised Australian shipping industry.

I ask leave of the House to move a motion to enable the member for Wide Bay to speak for 11 minutes.

Leave granted.

I move:

That so much of the standing orders be suspended as would prevent Mr Truss speaking in reply to the ministerial statement for a period not exceeding 11 minutes.

Question agreed to.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to 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.