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

I move:

That all words after "That" be omitted with a view to substituting the following words:

"the House declines to give this bill and associated bills a second reading until the bills have been referred to the Productivity Commission to:

(1) assess the Government's proposed 'shipping reform package' for both international and coastal trades with reference to the current and historical arrangements;

(2) measure and discuss the economic and environmental impacts of reducing or increasing regulation of Australia's coastal shipping services to Australian manufacturing and industry dependent on coastal shipping services, the wider economy and Australia's coastal trading fleet, including passenger services;

(3) provide recommendations on policy options that would achieve the Government's objective for a viable, competitive shipping service in Australia for both coastal and international shipping that is in the national interest, lead to productivity gains and will not disaffect Australian manufacturing, industry and tourism;

and, report on or before 31 December 2012."

In speaking on the Shipping Reform (Tax Incentives) Bill 2012 and related bills, let me begin by emphasising that there can be no doubt that Australia's shipping industry must play a more important role in our freight network. As I said when the Minister for Infrastructure and Transport, the Hon. Anthony Albanese, announced this package in September last year, for an island nation such as Australia our maritime industry is a vital part of the national and international transport network. In fact, we have the fourth largest shipping task in the world. Sea transport carries over 99 per cent of international cargo by weight and about 75 per cent by value. Domestically, ships carry around one-quarter of our freight. Despite this, there are only 22 Australian registered ships operating on our coast and that number has been in decline for a long time.

With our freight tasks set to double by 2020, and treble along the eastern seaboard over the same period, it is vital that shipping play a more important role in our freight network. Unless the quantity of domestic freight carried on ships can be increased substantially our roads and rail system will choke and our economy will be slowed. Shipping has the capacity to move large quantities of cargo across vast distances, take trucks off the road and relieve pressure on our rail network.

The five bills that comprise the shipping-reform package are designed to provide a regulatory framework for coastal trading in Australia, which the government claims will stimulate growth in the number of Australian ships on our coast, enhance the role of shipping as part of our national freight network and maximise the use of Australian flagged vessels. The package attempts to achieve these objectives by introducing a variety of financial incentives for Australian flagged ships, including company and income tax changes and accelerated depreciation for ships and the creation of a second register of Australian ships to be known as the Australian International Shipping Register. This will be available to ships meeting the eligibility criteria, which include the requirement to have two senior Australian officers on board. Finally, the package abolishes part 6 of the Navigation Act 1912 and in doing so abolishes the current permit and licence system and replaces it with a new, three-tiered licence system.

The idea of shipping reform has been around for years. A House committee inquiry from 2008 made a series of recommendations and a number of policy reform groups have been working in the area since 2009. This work culminated in the minister's announcement in September last year which broadly outlined the government's proposed shipping reform package. The minister also announced that the introduction date of the reforms would be brought forward by 12 months so the new scheme would commence on 1 July 2012—only a matter of weeks away.

At the time, industry expressed concern at the lack of detail contained in the minister's announcement, with Shipping Australia saying:

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 awaiting further details.

The Australian Shipowners Association said:

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

'In the near future' ended up being about three months later when the first draft of the Coastal Trading (Revitalising Australian Shipping) Bill and the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill were released for public comment. The industry consultation period identified serious flaws in the bill and resulted in a significant rewrite of the bill, which was released for public comment at the same time as the other bills that comprise the shipping reform package in February this year.

The bills are very complex but consultation was only open for a few weeks, and consideration of the submissions received was very brief, before the minister introduced the package into parliament on 22 March 2012. The package that was introduced included new provisions not contemplated during the consultation process. The coalition referred the bills to the House Standing Committee on Infrastructure and Communications, and the Senate Standing Committees on Economics, for their consideration. The House committee was given an extremely limited opportunity to look over the bills and assess the numerous submissions provided by various industry participants as to the deficiencies in the bills. I have mentioned many times before that it is disappointing that the House committee process is not living up to the expectations in the new paradigm of the hung parliament. Shipping regulation is a broad and complicated area and I was disappointed that the House committee did not have a proper opportunity to inquire deeply into the package.

These bills, if passed, would have a very significant impact on our coastal shipping industry. As the minister has often stated, this is a historic reform of our shipping industry. If the government has got it wrong it could decimate what is left of domestic shipping and lead to the loss of thousands of land based industry jobs which are unable to compete with imports carried on international vessels. Yet the House committee was only given the opportunity to have a cursory inquiry into the package. The new paradigm was supposed to enhance the role of the House committees, but they seem to be able to contribute less in this parliament than at any time before—not to mention the fact that the Senate committee inquiry into these bills is not due to be tabled until June and debate is being commenced in this House without the opportunity to have the benefit of the senators' advice before we are required to vote on these bills in this place.

The overarching criteria by which this legislation should be assessed is whether it will meet its objectives. The Minister for Infrastructure and Transport, the Hon. Anthony Albanese, in announcing the package in September last year, said:

What we are doing is creating an economic and regulatory environment that will revitalise and sustain growth and productivity in our shipping industry.

Will the bills before the House revitalise the Australian shipping industry? Will the bills before the House result in a significant increase in the number of Australian flagged vessels operating on our coast? I am not convinced that this is the case. The coalition members on the House Standing Committee on Infrastructure and Communications were not convinced, and many industry participants are not convinced.

From the outset I should say that I support the shipping industry in Australia playing a greater role in interstate and intrastate trade. As I previously mentioned, shipping already overwhelmingly provides our international trade. This has been the consistent position of the Liberal and National parties for some time. However, the coalition is not convinced that this package will revitalise our shipping industry of itself. In fact, we are gravely concerned that the opposite might result, with the Australian industry declining to such an extent that our maritime cluster, the associated industries that rely on coastal shipping, will decline to such a point where the Australian industry will reach a terminal position.

The first objective listed in clause 3(1) of the Coastal Trading Bill is that the regulatory framework promotes a viable shipping industry that contributes to the broader Australian economy. Does this package achieve this goal? Shipping Australia says in its submission to the House committee inquiry:

… some of the provisions, at least in the Coastal Trading Bill, 2012 are confusing and, in our view, require substantial amendment to meet what we understand to be the objects of the Bill.

Tom Pinder from Australian Coastal Shipping, which is involved in the east-west containerised coastal trading, says:

The proposed legislation, as it relates to coastal container shipping, can only exacerbate this situation and will not result in any Australian flagged/registered ships valiantly taking up the challenge of carrying containers on the principal coast route, namely, east coast to west coast.

… A continuation down the path of a one size fits all [policy] will result eventually in all of the current east west freight task being diverted to the inadequate infrastructure of road and rail with hugely increased costs and a totally detrimental effect on the carbon footprint of the country.

The Dry Bulk Shipping Users, which represents 60 per cent of the customers of coastal trade, is worried about the impact that the shipping reform package will have on the Australian manufacturing industry. They argue that a competitive coastal shipping industry is vital to ensure the continuing viability of a variety of Australian manufacturing and other industries, such as cement, sugar and fertiliser manufacturing. If it is too expensive to ship these goods around our coast, what is to stop cement being imported from China or sugar from being imported from Thailand instead? That outcome certainly would not meet the bill's stated objectives.

The Australian Logistics Council in their submission raised questions about how many ships this package would see come onto the Australian register or the second register. How many ships does the government forecast will revitalise our coastal shipping industry? The department says:

Given the range of consideration that the shipping investors and companies may have regard to in assessing where vessels will be registered or entered into service it is not appropriate for the Department to speculate on the number of vessels that may take the opportunities afforded by the new investment platform.

In other words, they do not know. So the department does not know if this legislation will revitalise the Australian shipping industry.

The shipping industry's leading companies are saying this regime will not attract them to the Australian registry or to the Australian market. What is clear from the submissions from industry to both the House and Senate inquiries is that the new licensing scheme will increase the regulatory burden on the shipping industry.

Many of the submissions to the House and Senate inquiries focus on the red tape which will be created by the new temporary licensing system. The Coastal Trading (Revitalising Australian Shipping) Bill 2012 abolishes part VI of the Navigation Act 1912 and in doing so abolishes the current permit and licensing system. The bill provides for a three-tiered licensing system: (1) a general licence which provides unrestricted access for Australian registered vessels crewed by Australians, permanent residents or foreigners with appropriate work visas to engage in coastal trading in Australian waters for a maximum of five years; (2) a temporary licence which provides limited access to engage in coastal trading for foreign flagged vessels or Australian international second register vessels for a 12-month period for specifically identified voyages; and (3) an emergency licence which provides extremely limited access in identified emergency situations such as natural disasters.

Many shipping companies have identified deficiencies in the temporary licence system which will be established under the new act. Caltex puts industry's concerns quite distinctly in their submission to the House committee inquiry when they say:

The shipping reform package, in particular the [Coastal Trading] Bill, will increase red tape at a time when the Commonwealth and state governments, together with business, are seeking ways to reduce it. The Bill contains clear examples of unnecessary and unproductive regulatory requirements and therefore should be subjected to close scrutiny to remove all regulation not essential to the objects of the Act and the broader national objective of improving business productivity through greater efficiency.

It is ironic that at the same time the House is about to consider the implementation of a national maritime safety regulator, which will see the industry benefit from a single national regulator as opposed to eight separate systems established by 50 separate pieces of legislation, the House is considering this legislation, which will increase red tape on the same industry.

There are a number of difficulties with the temporary licence system—firstly, the information required to apply. One of the main deficiencies identified by industry is the prescriptive requirements for an application for a temporary licence. The department, in their supplementary submission to the House committee inquiry, says:

Extension to a 12 month period [for a Temporary Licence as opposed to a continuing voyage permit which lasts for three months] will provide holders of these licences with greater certainty regarding their shipping arrangements.

However, the companies which would apply for these temporary licences clearly disagree. According to the explanatory memorandum to the coastal trading bill, a temporary licence will be issued for 'only those voyages where the required information is known, including expected loading dates, loading and discharge ports and cargo type and volumes.' How can the government expect industry to provide such detailed information for an entire 12-month period in advance? As Shipping Australia says:

It is impossible to forecast the movement of such cargoes over a twelve month period in terms of expected loading dates, kinds of volume of cargo, type of vessel and the ports of loading and unloading of the cargo.

This will be a particular problem in the break bulk and bulk industries. This concern is echoed by Caltex in their submission when they state:

Given the variable nature of our operations it is not possible for Caltex to nominate its coastal trade for the coming 12 months because this is not known nor planned more than three months in advance. This has been the normal operating practice of Caltex, which will be adversely impacted by the requirements of the [Temporary Licence] regime.

Shell backs up this assertion stating:

Overall the Temporary Licence system appears more complicated and burdensome to both the oil industry and the Department than the existing Permit system, and in our opinion, will fail to deliver any of the objectives of the Act in respect to the oil tanker segment of the Australian shipping industry.

The Australian Association for Maritime Affairs state that they remain concerned that the draft legislation seeks to 'develop a national coastal shipping industry by using restrictive and ultimately expensive cabotage measures.'

The cruise industry have also expressed concerns about the prescriptive nature of the temporary licence as detrimentally affecting their business. This could have a serious impact on Australia's tourism cruising industry. In practice, the conditions of the temporary licence will be cumbersome for shippers and will add to their regulatory burden. How can the sugar industry, for instance, know 12 months in advance how big the crop is going to be, where it is going to be sold to, who the buyers will be and when they will want to take delivery of the sugar? All of that information has to be provided before they can get a permit to hire the ship to move this vital Australian cargo around our coastline.

Secondly, there is the system for variations to a temporary licence. It should be noted that it is possible to apply for a variation to a temporary licence under the coastal trading bill. However, to do so requires amendments to a minimum of five voyages. Shipping Australia says about the variation process:

This simply does not make sense. If an applicant does expect to have five voyages over the twelve month period (of their Temporary Licence] but then finds he has seven voyages he can't seek a variation to the temporary licence?

Why this arbitrary limit has been introduced is unclear and it adds further complexity to the system. If, for example, an applicant would like to add two new voyages to their temporary licence in a 12-month period they are unable to do so, and, if no other vessel is available, the goods would have to travel by road or rail or not at all. In this way these changes have the potential to disadvantage rather than encourage coastal shipping as a viable transport mode.

Additionally, to apply for a temporary licence in the first place, a minimum of five voyages is required. As noted in the explanatory memorandum for the coastal trading bill:

One exposure draft of the Bill released for public consultation proposed that the minimum number of voyages be set at ten voyages. There was broad consensus from industry that many operators could not provide sufficient detail for ten voyages and that five voyages was more practical.

However, 10 or five, industry's concerns remain. This has been identified by a number of industry participants as a problem. As Caltex states:

Implementing a minimum voyage requirement on [Temporary Licence] applications is not practical or reasonable. The requirement places unnecessary restrictions on shippers who undertake less than five voyages in a 12 month period and disadvantages these stakeholders whose trade is not likely to encourage investment on the coast due to their variable needs and low demand.

Caltex then goes on to say that in such circumstances companies may be forced to include 'bogus' or 'fictitious' voyages in their applications to meet the threshold.

The possibility of 'fictitious' voyages being included to allow a grant of a temporary licence is also discussed by Australian Shipping Consultants in their submission to the House committee inquiry and the Australian Shipowners' Association. The ASA state in their submission:

Applicants who genuinely require fewer voyages than the minimum set will be forced to provide spurious information to make up the set number required. This is not in the interest of the applicant, [General Licence] holders who may wish to nominate or the Department—who will be processing the application. This is an example of red tape which must be avoided.

Obviously this would not meet with the objectives of the bill and increases the regulatory burden for businesses. Caltex goes on to say that in 2010 Caltex undertook only three petroleum product voyages and in 2011 only undertook four voyages. While Caltex did undertake coastal trade in crude oil movements, which would allow them to meet the five-voyage minimum requirement, their case goes to show that it is possible for specific industries to fall below the requirement. Shipping Australia also comments on the five-voyage limit in their submission, stating:

… the minimum of five voyages, which in our view, discriminates against the smaller coastal shipper who may, for example, have two or three voyages per year …

They also note that when the Fair Work Act was extended to foreign flagged coastal shipping it was limited to those shippers undertaking more than two coastal voyages per year. Two or fewer was considered incidental and the Fair Work Act would not apply. Despite this, the costal trading bill seeks to establish a whole new minimum standard. In response to industry's concerns about the five-voyage limit, the department states that the vast majority of shippers undertake in excess of five voyages per year so they would qualify under the new temporary licence. However, they acknowledge, 'For the small number of operators requiring fewer than five voyages, the new arrangements may require some reconsideration of their operating requirements.' If I might add: What—go out of business, or not be innovative and introduce, for the first time, shipping in an area where it currently is not being used? This would kill innovation and prevent the extension of shipping operations to industries where it does not currently happen. As for the department's rationale for the minimum limit, it says:

The decision to impose a minimum seeks to encourage shippers and operators to plan ahead and consider what their shipping requirements will be over an extended period of time, rather than on a voyage-by-voyage basis.

This explains the 12-month limit on a temporary licence perhaps but not the minimum number of voyages. The Australian Logistics Council states in their submission to the House inquiry:

In the absence of an explanation why the arbitrary figure of five voyages was picked, ALC would recommend the five voyage threshold to eligibility to apply for a temporary licence be removed from the legislation.

The Coalition agrees.

In addition to the above concerns with the new licensing system, a number of other deficiencies have been identified in the package. As noted by Allianz and Suncorp in their submissions to the Senate and House inquiries, there is currently a gap in workers compensation protection for crew employed on vessels registered under the Australian international shipping register while engaged in coastal trading. The department acknowledges this limitation and is preparing advice on how to address this matter—which just goes to show that this legislation has not been thought through.

The reporting requirements for the coastal trading bill are another layer of unnecessary red tape for the shipping industry. Under section 61 of the coastal trading bill, the licence holder must notify the minister at least two business days before the vessel is loaded to undertake a voyage authorised by a temporary licence. Section 62 states that within 10 business days after the completion of each voyage authorised by a temporary licence, the holder must give a report to the department on the particulars of the voyage. A contravention of these requirements could lead to a temporary licence being cancelled. As noted by some industry participants, all this paperwork seems unnecessary. The licence has been issued for a particular number of voyages and the subsequent reporting before and after an authorised voyage seems redundant.

Under the new licensing scheme, general licence holders are able to object to particular voyages of temporary licence holders if they believe they are able to carry the cargo. However, there is no way that temporary licence holders or their customers can determine if a general licence Australian-flagged vessel is available up to 12 months in advance. For this reason, the Australian Shipowners Association and some other stakeholders have recommended establishing a publicly available register of general licence holders.

The bill provides that the minister will determine the minimum wage to be paid to crew on a vessel on the Australian International Shipping Register by legislative instrument for each category of seafarer. The wage cannot be lower than the International Transport Federation template agreement. Shipping Australia has raised concerns that the minister could determine higher wages for seafarers when compared to the ITF agreement and, if this were to happen, the shipping register would not fulfil the objective of creating an internationally competitive register.

To have access to some of the taxation incentives, training requirements will have to be fulfilled. However, the details of these training requirements are yet to be finalised by the Maritime Workforce Development Forum and will thus be contained in future regulations. Other concerns with the taxation incentives have been raised by taxation experts. The submission from Moore Stephens Accountants and Advisers, as the world's leading shipping accountant and adviser, provides some interesting points. They state:

… in our opinion some of the features of the proposed law do not do enough to put Australia on an equal footing with the rest of the world's prominent shipping nations and as a result may not achieve the objective of reinvigorating the industry.

The government's regulatory impact statement on the bills states at paragraph 156:

With a tighter cabotage policy, Australian shippers of domestic freight incur higher costs from lost opportunities to take advantage of cheap transport in passing foreign ships and having to pay for empty repositioning voyages by domestic ships. Part of the cost of empty voyages by foreign ships may be passed on in the form of higher freight rates to the Australian exporters and importers that employ the foreign ships to carry their international cargoes.

However, the Australian Logistics Council notes in their submission that no attempt is made in the regulatory impact statement to quantify this and put a figure on just how much more the users of coastal shipping would have to pay under the new arrangements. It has been well publicised that the dry-bulk uses of shipping in Australia, which represents 60 per cent of the customers, are concerned about the fact these issues will impact on their industry.

The prospect of cheap imports replacing Australian manufacturing and industry is extremely concerning. The government seems intent on increasing the costs to manufacturing and industry to such an extent that it is no longer economically viable. When shipping sugar from Thailand is cheaper than shipping it around the Queensland coast, and when shipping cement from China is cheaper than shipping it from port to port, you have to wonder what message we are trying to send to our manufacturing industry.

The government's regulatory impact statement acknowledges that freight prices might go up, but it ignores the fact that there are alternative supplies overseas that can replace our local industries and the jobs that go with them. Many customers have sought further investigation into the financial implications of the package on the cost of moving freight. A number of submissions to the House and Senate inquiries requested that a Productivity Commission inquiry be held to determine what impact this complex regulatory change will have on the Australian coastal shipping industry, the cost of freight and the costs to the coastal shipping customers. The coalition supports this move, particularly in light of the truncated House committee inquiry that has been held. I have also discussed this matter with the member for New England, who shares similar concerns. On that basis, I have moved the amendments circulated in my name, which will have the effect of deferring the debate on this legislation until the Productivity Commission has had a proper chance to look at this bill. Finally, I would like to make a few comments about the industry compact. When the minister announced the package in September, he stressed the importance of a compact between shippers and the unions. Traditionally, Australia's shipping industry has been uncompetitive internationally. The higher cost of running an Australian as opposed to a foreign flagged vessel has been prohibitive. When the minister introduced the package in March he said:

The final element of the reform package is labour productivity.

We are committed to aligning Australian productivity practices with the best in the world.

To do this, we will need a compact between industry and unions.

… this compact must include changes to work practices, a review of safe manning levels and the use of riding gangs on coastal vessels.

This compact is essential to the reform agenda.

I agree. If the government is going to provide generous taxation concessions, then it is absolutely essential that there be a radical reform to the labour practices in the Australian shipping industry and to the way in which our ships are managed. It is essential that there be a compact which brings our productivity practices in line with the best in the world. Where are the productivity gains that will see shipping's decline in our freight network turnaround?

The compact remains unfinished. The House is being asked to vote on this bill, which is fundamentally based on a compact between the maritime unions and the Australian shipping industry, and yet we have still not seen the detail of this compact. The Department of Infrastructure and Transport has said:

The Department is not involved in developing the compact. Accordingly, any questions regarding this matter should be referred to the relevant industry parties.

So we do not have the compact but the legislation is critically dependent on this compact—this legislation that is going to deliver such reforms to the Australian shipping industry and such a transformation in past practice that international shippers will once again be interested in investing in Australia! Frankly, history suggests to us that the MUA, the Maritime Union of Australia, is not given to making concessions in relation to workplaces. Is it any wonder that the coalition is sceptical?

The coalition is committed to the Australian coastal shipping industry. We acknowledge the importance of the goal of revitalising our shipping industry. However, we doubt this package will achieve this objective. That is why we are moving that debate on the bills be deferred until the Productivity Commission has had an opportunity to examine the proposed measures. In the committee stages, we will be moving further amendments to seek to improve this proposal, particularly the new permitting arrangements, to try and make them practical and to make that section of the bill more workable.

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Local Government) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Hearing the Leader of the Nationals takes me back to 1999, when John Anderson, the then Leader of the National Party and Commonwealth Minister for Transport and Regional Services, declared that Australia is 'a shipper, not a shipping nation'. Send all the livestock overseas to be processed. Do not worry about having any ships in Australia. That is the National Party position. 'As long as we look after our constituency, who cares about anything else? Don't care about the nation, just concentrate on what we're interested in.' I am very, very sad to hear all that.

These are exciting times and exciting opportunities for Australia as a nation. Last week, it was good to receive the great news that Tasmania is receiving a one-off package of $20 million to help Tasmanian exporters reach international markets. This has come about as a result of the rising transport costs for Tasmanian exporters and the difficulties exporters face with the sole shipping container operator into Tasmania ceasing its operations. However, more needs to be done to ensure that Tasmanian exporters have equal access to the export trade and to export transport. These bills therefore come at an opportune time to help Tasmania restructure its freight carrier systems and look at new ways to integrate transport in the state and overseas, not ruling out the possibility of international ships calling again to Tasmania.

Shipping reform seems to be well overdue. I understand from the minister that there are aspects of shipping law that have not changed for over 100 years, which seemed to amuse the crew on the Insiders program yesterday. The Shipping Reform (Tax Incentives) Bill 2012 provides a mechanism for the shipping industry to obtain a certificate for an initial step in gaining access to a range of taxation concessions for the shipping industry. Additional criteria are contained within the Tax Laws Amendment (Shipping Reform) Bill 2012. I would have thought that was a pretty good aim for Australia as a nation to encourage ship ownership and ship operations in Australia, as well as to encourage the employment of Australian seafarers.

Shipping is a global industry, characterised by intense competition among international companies with relatively few barriers to entry and exit. Vessels in more than 30 foreign jurisdictions—with which Australian vessels must compete—receive the benefits of fiscal support, for example, tonnage tax and taxation concessions, exemptions and subsidy schemes under their home registries. This has tended to lead to bigger ships and therefore many of these countries have introduced fiscal support measures as a means of retaining ships on their national registers, rather than see their national flags moved to foreign registries over which they have less direct control. This action has seen their formerly sinking national registries attract back many of the defecting ships and is consistent with the findings of the House of Representatives committee on infrastructure and transport. I think of the British government's situation during the Blair years where it was bringing back shipping and a shipping industry for the UK. That seems to have worked tremendously for them. The regional development and local government department notes that supportive fiscal measures have resulted in an increase in additional tonnage back to national registers. The tax incentives will provide for the following: accelerated depreciation, with rollover relief for owners of Australian registered eligible vessels; an income tax exemption for Australian operators of Australian registered eligible vessels on qualifying income; a refundable tax offset for employers who employ eligible Australian seafarers; and an exemption from royalty withholding tax for foreign owners to eligible vessels leased under a bare boat or demise charter to an Australian operator.

This bill is the first step a taxpayer will need to take in establishing their eligibility to access the tax concessions. It provides for the issue of certificates after the end of the financial year to applicants who need to meet the requirements of the regime. It also provides companies applying for those concessions for the first time the opportunity to obtain a notice during the first year of entry that will give them a degree of comfort that the arrangements they propose will meet the requirements of the Shipping Reform (Taxation Incentives) Bill 2012, thus reducing the pressure on both them and the department when they are compiling their tax returns.

In summary, the new legislation will: establish eligibility criteria for access to the taxation concessions by defining 'eligible company' and 'eligible vessel'; provide a framework for the Department of Infrastructure and Transport to issue applicants with a notice and, later, a certificate confirming they have satisfied the department's requirements for the certification; provide for the department to collect and collate data in relation to these reforms; and provide for decisions to be reviewed if disputed.

The other issues I wish to mention relate to the Coastal Trading (Revitalising Australian Shipping) Bill 2012—which I think is very well named—the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012 and the Tax Laws Amendment (Shipping Reform) Bill 2012. As most people are aware, we are in the middle of a resources boom. Yet only one-half of one percent of that boom is carried by Australian flag vessels—hence my original statement. In the past decade the Australian fleet has gone from 55 ships to 21, with only four operating on international routes. Our ports manage 10 per cent of the world's entire sea trade and $200 billion of cargo is moved annually. I wonder how much of that insurance is written in Australian dollars by Australian companies. We need to encourage more investment in shipping within Australia, and these ships will be the catalyst to attract an increase in shipping.

As we have found in Tasmania, Mr Deputy Speaker Lyons, as you would be well aware, Australian shipping is at a critical juncture in its ability to continue to be viable. Ships are getting bigger, which puts pressure on the ports they visit and affects which ones they can get into, and their business plans are changing because of that. The lack of an Australian shipping industry that can compete in the international market place is a lost national opportunity—and certainly for Tasmania it is an even bigger one.

One of the consequences of this lack of investment is that the average age of the Australian fleet now sits at almost 20 years, as against the global average of 12 years. The age of our fleet has implications for the industry's productivity and environmental performance. Modern vessels incorporate new technology delivering greater efficiencies and, of course, better environmental performance. Without new investment in the fleet, Australian shipping will continue to lag behind world standards. These bills aim to: promote a viable shipping industry that contributes to the broader Australian economy; facilitate the long-term growth of the Australian shipping industry, enhance the efficiency and reliability of the Australian shipping industry as part of the national transport system; and maximise the use of vessels registered in the Australian general shipping register.

However, a ship is only as good as its crew. That is why a key element of the government's reform package is workforce development. We must attract, train and retrain a skilled seafaring workforce. There will be no incentive to invest without the right people in the right jobs. In Tasmania we have the Australian Maritime College, which is part of the University of Tasmania. That is partly in your electorate, Mr Deputy Speaker Lyons, and it is partly in mine. It will certainly give us an opportunity to not only train local seamen but offer courses for many other countries—as we have done in the past, especially throughout Asia and the Pacific region but also in other parts of the world.

On the simulator at the Australian Maritime College people can learn how to bring ships in to dock. And you, Mr Deputy Speaker, like me, have probably knocked over a couple of wharves using that piece of equipment! It is a major piece of equipment. There are ships belonging to the Maritime College tied up at the jetties at Beauty Point. They take engineers and trainee masters to sea to teach them how to gain the skills to work in the industry. So we have the facilities and we have many opportunities which can be expanded through that college. The college has experimental facilities through which a huge volume of water can be moved—a research component which I am sure we can grow into the future. That gives us an opportunity to bring seamen from all over our part of the world into better training plus an Australian seafarers training package. I note that we do need to go through the compact and work out what are modern work practices and what helps the productivity process, which gives us the opportunity to make our shipping viable internationally. I am sure we can achieve those things.

This is a very important set of bills for my home state, Tasmania. They are important in the restructuring of the shipping industry. I commend the minister for the interest he has taken in this and for making it happen. It is a vital part of the development of the national economy through infrastructure, and we need to continue to build on that infrastructure into the future. I certainly support the bills and I oppose the amendment.

Sophie Mirabella (Indi, Liberal Party, Shadow Minister for Innovation, Industry and Science) Share this | Link to this | Hansard source

I rise to speak in support of the amendment. The arguments were very eloquently put by the Leader of the Nationals. It is a very sensible amendment at a time when the Australian economy and manufacturing are undergoing very challenging circumstances. It is incumbent on all of us in this House to ensure that new legislation passed does not add to the uncompetitiveness of Australian industry, as is the case with much that has passed this House of late, particularly the carbon tax. Industry has been hammered left, right and centre. Little regard is given to the long-term viability of the manufacturing sector. This amendment is very sensible in that it aims to ensure that legislation is not passed that causes more damage to a fragile manufacturing and industry situation.

What we all want is a competitive industry, a viable coastal shipping industry that adequately and competitively services Australian industry. We have heard from industry that the legislation will do anything but that, that it will cause great damage, add to costs and add to import replacement. That is an extremely unsatisfactory situation. The impact of these bills will be an absolute flood of imports into Australia, because currently it is as cheap, or costs the same, to bring cement from China to Australia as it is to take it from one Australian port to the other. The impact of these bills, if they are passed, will be to make those international imports competitive and cheaper than shipping from one Australian port to the other. Anyone on any measure would say that is absolutely insane and it is what is going to happen. It is causing great consternation to the industry. New research from Deloitte Access Economics has said that the coastal trading bill will cost the economy up to $466 million in the next decade and that we will see freight charges increase by 16 per cent. Conservative estimates are that it will kill off 570 full-time Australian jobs.

This is an attack on Australian industry at a time when it can least afford it. It is rushing this legislation through as a sop to the Maritime Union of Australia instead of looking to the national interest to see what is the best possible scenario for the Australian shipping industry but also for Australian industry. It is not just industry that will be affected. It is agriculture as well. Sugar is already being shipped from overseas directly to Australia because it is cheaper than shipping it from eastern Australia. So we have sugar being imported to the southern ports of this nation because it is cheaper. The legislation will only exacerbate these sorts of situations.

Quite ironically, we have Australian industry that is at the cutting edge of technology to reduce their emissions, like Australian cement producers who are leading the world in technology for low-emissions production. Yet this bill will make cement from China, Indonesia, Taiwan and Thailand cheaper and radically undercut Australian suppliers just on the shipping costs alone. So, at a time when the government has legislated for the world's worst and most expensive carbon tax, it is providing an absolute disincentive for Australian industry to continue the good work that they had started well before the carbon tax legislation was even mooted.

We will see Australian jobs go, a worldwide CO2 increase because it is cheaper to manufacture overseas, and the government refuses to acknowledge these basic facts. You have to ask the question: when so much is at stake, why is the government not waiting until the Productivity Commission has reported on the impacts of this legislation? Why do they want to rush it through? What have they promised the Maritime Union and why are they afraid of allowing full scrutiny of the very valid issues that are concerning Australian industry across the board?

Whilst the bills may promote protectionism of Australian shipping, what is the impact going to be on Australian manufacturing and industry? At a time when it is acknowledged—and all you have to do is visit any manufacturing hub around Australia—that Australian manufacturing is doing it tough, and Australian industry is doing it tough, where is the proper analysis of the impacts that this legislation will have on Australian industry? Ironically, it is being promoted as an environmental reform and as being important to protect the environment, but that is another furphy.

We see that the minister has referred to shipping incidents that could potentially cause damage to our environment—they have included references to a coal ship that was grounded on the Great Barrier Reef—but omitted that the accidents were not foreign vessels operating coastal voyages but international vessels, and that will not change as a result of these bills passing into law. So there is a bit of mixing of the facts and the truth to make a case. It is almost as if the government decided: 'They're our mates; they've extracted their price. We've got to pass these bills and we'll make up whatever excuses and reasons we need to to ensure that this legislation passes, because that's what will keep the Maritime Union happy,' and that is just not good enough. Day after day after day we hear that the government are consumed with their own survival, with their internecine warfare and with keeping happy their mates who nominate them and put them into parliament at the expense of providing national leadership, of governing for all Australians, of all Australian jobs and of all Australian industry.

Dry bulk shipping users in Australia are extremely concerned and extremely anxious about their competitiveness when they look at the impacts of these bills, because they are extremely dependent on freight to move their goods around the country. We look at—we have mentioned cement and sugar—fertiliser, bauxite, iron ore and gypsum. When you look at all these goods many of them are absolutely critical to our modern economy and to our growing economy, so what will we do with these bills? What we will do is rely on imports instead of providing an opportunity for domestic manufacturers of, say, cement and gypsum to be part of whatever aspects of our economy are growing, and those segments will be taken up increasingly with buying imported products.

It is quite unusual that the government have gone on this very heavy-handed approach because, when we look at the facts, we see that 70 per cent of Australian coastal shipping is already undertaken by domestic vessels. It is extraordinary that the government have not been able to actually demonstrate what the economic benefits of these bills will be. Their own regulatory impact statement and of course the analysis undertaken by Deloitte Access Economics show that there is a decrease of economic activity in this country. Even on their own analysis they recognise that there is going to be some damage.

So what is some of this damage going to be? It will lead to an increase in coastal shipping and of course that means, necessarily, an increase in freight rates by up to 16 per cent. That is a scenario where domestic ships replace foreign ones. Again, that is an enormous increase in the cost structure for Australian manufacturers and Australian industry. We have had the usual scaremongering from the government incorrectly claiming that this is all about using cheaper labour and cheaper wages, but the reality has been that under the Fair Work Act Australian award wages have been paid to employees operating on a coastal shipping voyage.

But the government does need to acknowledge that it is definitely more expensive to use Australian ships. Why is that? Let us just look at some of the conditions—and these are extraordinary conditions; we need to remind ourselves that we live in a global world and we need to be competitive. These conditions include, approximately, taking one day off for every day worked—that would add an extraordinary cost to using an Australian ship—and increased annual leave of an extra five weeks. These are real costs that are borne by those who use Australian flagged vessels. Again, where is the thorough review of the economic impacts of these bills?

Why can't the government wait for the much respected Productivity Commission to present them with their analysis? The answer is that no-one from the other side of the House in this debate has considered in any serious way the impacts on Australian industry and on Australian manufacturing. How can you claim that you want to help manufacturing and how can you claim that you want to pursue reforms to ensure that the Australian economy is ready to be part of the global economy when you refuse to listen to and refuse to acknowledge the very real costs and decreasing competitiveness that industry and manufacturing will be hit with through these bills? It is really quite telling that, even in the objects of these bills, there is a failure to include a statement regarding international competitiveness. So it is not even on the agenda that these so-called reforms are aimed at making the Australian shipping industry more competitive.

These are ill-considered bills. They are being rushed through, and you have to ask yourself: why would the government be trying to rush them through? (Time expired)

Laura Smyth (La Trobe, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to speak in this afternoon's debate on some significant reforms being made by this government after some considerable effort by the minister, who has done an excellent job in putting forward such a comprehensive package of reforms, all of which are well overdue. I stand to speak against the amendment, which would have the effect of deferring, for another critical period of time, action in a very important area both for the productivity of the industry and for its very survival.

The Shipping Reform (Tax Incentives) Bill 2012 and related bills before us today are geared at revitalising the Australian shipping industry. We are invited by speakers opposite during the course of this debate to consider why these measures are being dealt with so promptly and why these measures are being dealt with in a seemingly—I believe I am quoting the member for Indi—'fragile industrial situation'. The reason for that is the same as the reason for so many of the reforms being undertaken by this government in the relatively short period of time which we have been in office. It is the simple fact that we experienced over a decade of policy inertia from the Howard government.

I have stood here on many occasions speaking about the significant reforms that the government are making after the Howard period of policy failure. It leads me to believe that all that was being done during the decade of the Howard government was that quite a lot of people were getting very experienced with Tetris, with playing with joysticks and with demonstrating their skills in online gaming. I simply cannot understand why so many areas of critical industry reform in so many areas of policy development are being left to this government to respond to after a period of inaction.

Despite the fact that we are in the middle of a once-in-a-generation resources boom, only half of one per cent of the trade generated by the mining industry is carried by Australian-flagged vessels. That is an astonishing figure. We know that over a decade Australia's fleet has declined from 55 to 21 ships with a mere four operating on international routes. For the largest island nation in the world that really is an extraordinary figure and requires the intervention of this government. While shipping carries around 99 per cent of Australia's trade by volume, and while Australia's shipping task comprises around 10 per cent of the world's trade carried by sea, our fleet is in decline.

We know that when John Howard came to office in 1996 Australia had 55 trading vessels shipping 3.2 million tonnes. By 2008 there were only 30 vessels remaining which shipped just 1.8 million tonnes. In an extraordinarily short-sighted move the coalition abandoned the capital grants assistance and accelerated depreciation in the PAYE rebate scheme. At the same time it tripled the number of trading permits to foreign-flag crews from fewer than 1,000 in 1999 to more than 3,000 around a decade later. The consequences for the industry of these moves was and is devastating. It really is an indication of just how short-sighted the coalition has been on the Australian shipping industry that, at precisely the same time it was cutting support to the industry, Germany, the UK, France, the Netherlands, Japan and South Korea were each embarking on comprehensive programs to rebuild their respective shipping industries. Those nations recognised the benefits in an economic sense, in a strategic sense and in environmental terms of a viable and robust shipping industry. Despite the fact that it was presiding over the economy of the largest island nation in the world, the Howard government made no meaningful attempts to reform the industry for our future.

We anticipate that trade in our ports is likely to triple during the next 20 years. It should be our own shipping industry which experiences the benefits of that increased trade. It should be our workforce that gets the benefit of jobs growth in a viable Australian shipping industry. All of this can only happen if the reforms in the bills before us are implemented and implemented now.

It is revealing to see the discourse of the Nationals leader today on the reforms before us. It is revealing to see the contributions of other members, particularly the National Party, to this debate. I see that we have some members of the National Party in the House as I speak. It might be worth their reviewing the document that I have in my hands at the moment, which is the policy platform of the Nationals for 2011-12. Tellingly, shipping reforms are right up the back on page 65. It would be worthwhile for Nationals members to have a look at the second column on that page, which talks about more efficient shipping. It has a look at four key dot points and states:

The Nationals will: Introduce a tonnage tax to replace company tax on an opt-in basis, linked to mandatory training arrangements.

Let us have a look at some of the reforms that are in the bills before us, most notably some of the taxation reforms. We know that the government has consulted extensively with industry and with the tax office and that, as a result of those consultations, it has become apparent that a zero tax rate was a better option because not only does it prevent the need to create a new tax arrangement and not only does it mean that we will be a world leader in shipping tax arrangements but also—and tellingly—it reduces red tape. The Leader of the Nationals today spoke at length about his concerns that the reforms and the measures before us would lead to a substantial amount of red tape. It has been a couple of years now since I was in commercial practice, but I certainly recall that the tax acts of Australia constitute about a foot's worth of pages. I would have thought that reducing the tax rate to zero would have meant a significant cut to red tape and would have satisfied the Nationals and, indeed, the stated policy platform objective at dot point 1 on page 65 of the Nationals' platform—but perhaps not.

Point 2 of the Nationals' platform says that they will introduce a national system of training support under the supervision of the Australian Maritime Safety Authority to replace the existing state based distribution of funds. Let us have a look at what the government is doing to promote training and to ensure that we have a well supported workforce. A key element of the government's shipping reform package is workforce development, and it is in order to ensure the continued viability of the Australian shipping industry that we know we must attract, re-train and retain a skilled workforce for the industry. It is for that reason that in January of this year the Maritime Workforce Development Forum was established—so that the government would take on the advice and expertise of experienced people from industry, unions and the training sector. That forum is addressing areas that are central to building Australia's skill base and will include a workforce plan being developed for the medium term to address the issues, including the ageing workforce and immediate skill gaps.

It would seem that at least two points of the Nationals' platform have now been attended to or worked towards in the bills before us. Let us have a look at point 3 of their platform on more efficient shipping:

Examine ways to reduce the income tax disadvantage suffered by Australian seafarers operating outside Australian waters, compared with seafarers from other nations.

I have a swathe of reforms being put forward in the bills before us to deal with exactly that point, but apparently it has escaped the Nationals' notice. The reforms in the two tax related bills, as part of the five reforming bills before us today, deal with four matters—I have already mentioned a zero tax rate but have not mentioned the others—which are: accelerated depreciation arrangements; rollover relief for selected capital assets; tax exemptions for seafarers working overseas on qualifying vessels so that we remove disincentives for companies employing Australians; and, finally, exemption from the payment of royalty-withholding tax for owners of vessels where the vessel is leased under a bareboat charter to an Australian company. That is quite a significant package of reforms put together in consultation with industry, developed by this government and contemplated, it seems, in the Nationals' platform document—though apparently they are not up to accepting it. I will leave a copy of this platform document here when I leave. I encourage members of the Nationals to be vigorous in coming over here and having a read of it.

The final point in the more efficient shipping section of the Nationals' platform document, right up the back, is to establish an Australian second shipping register. I simply say—

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order on direct relevance. I do not see anything to do with the Nationals' shipping plan in the resumption of debate in the Shipping Reform (Tax Incentives) Bill 2012, nor do I see any reference to the Nationals' shipping platform within the articles of the bill. I ask that the member be directly relevant.

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

Thank you for the attempted advice. The member will be relevant.

Laura Smyth (La Trobe, Australian Labor Party) Share this | Link to this | Hansard source

I am indeed pleased that it has been conceded that the Nationals' platform is utterly irrelevant to national shipping policy in this country. That was a courageous point of order well made.

As to the final point that I referred to—and I will not mention the particular document that I was reading from in deference to the preceding speaker—the policy reforms before us create an Australian International Shipping Register and require the master and chief engineer to be Australian residents, while the balance of the crew may be foreign residents paid at internationally competitive terms and conditions of employment.

It would seem that these reforms satisfy, in the main, 75 per cent of the Nationals' policy objectives and are well on the way to satisfying the remaining 25 per cent. Yet today the Leader of the Nationals is seeking to push these five important reforming bills off to the never-never. It is very disappointing to see that, because the issues surrounding Australia's shipping policy have been examined at length and in consultation with industry on several occasions; indeed, they were considered by the House of Representatives Standing Committee on Infrastructure, Transport, Regional Development and Local Government in its final report in 2008. A regulatory impact statement has been prepared on the proposed reforms, and that has been made available. Ultimately it is not clear to any of us why the coalition, after a decade of inaction, is now seeking to defer meaningful, significant and revitalising reforms for our shipping industry for any reason other than, presumably, its own political ends.

These reforms mark the most significant and the most holistic reforms to Australian shipping since the early 1900s. They are long overdue. Australian shipping is at a critical point, and without the reforms before us we risk not only the considerable benefits that could flow to the industry from the mining boom but also the industry's continued viability. A failure to support an Australian shipping industry that can compete in the international marketplace is a lost national opportunity.

Our competitors in the global market are well ahead of us in fiscal incentives. They were well ahead of us during the Howard years, as I mentioned earlier. As a result, for more than a decade there has been almost no meaningful investment in Australian ships. One of the consequences of this lack of investment is that the average age of the Australian fleet now sits at around 20 years in comparison to a global average of around 12 years. Inevitably that has detrimental consequences for the productivity of the Australian shipping industry, its efficiency—and we have certainly heard about more efficient shipping from the Nationals' platform document, but they seem to block it out—

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

No, please do. It's a great document.

Laura Smyth (La Trobe, Australian Labor Party) Share this | Link to this | Hansard source

To the member for Riverina: I will certainly leave a copy of your platform here for you to read for the first time.

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

Direct your comments through the chair. The member for Riverina, you will get your chance.

Laura Smyth (La Trobe, Australian Labor Party) Share this | Link to this | Hansard source

Inevitably this ageing fleet has very significant consequences for efficiency, productivity and the environmental performance of Australian vessels compared with more modern fleets. The reforms in the bills before us include significant measures to promote investment in Australian shipping through tax concessions, the variety of which I mentioned earlier. Without these, we will continue to lag behind world standards. Without a sufficiently modern fleet, we cannot in turn attract new recruits. The shipping industry already faces pressures that arise from an ageing workforce and, without the capacity to attract new recruits, we are likely to see it become an even less viable proposition than it currently is. Without being able to assure new recruits of continued work in the shipping industry, the pressures of an ageing workforce will only increase.

It is timely that the bills are before us today. The bills address a variety of measures from taxation to training opportunities to changes in licensing arrangements. They promote a viable shipping industry that will contribute to the broader Australian economy, they will facilitate the long-term growth of the Australian shipping industry, they will enhance the efficiency and the reliability of the Australian shipping industry as a part of our national transport system and they will maximise the use of Australian vessels. In short, these reforms are well overdue. It would be derelict of this parliament to defer them to any future period, and I encourage the House to support their adoption.

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

Typically, as with so much legislation rushed through this parliament, there has been insufficient time for stakeholders to comment about the bills being debated.

Those who could have, would have and—most importantly—should have had a say in Shipping Reform (Tax Incentives) Bill 2012, Shipping Registration Amendment (Australian International Shipping Register) Bill 2012, Coastal Trading (Revitalising Australian Shipping) Bill 2012, Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments And Transitional Provisions) Bill 2012 and Tax Laws Amendment (Shipping Reform) Bill 2012 were given little time to respond despite the complexity and wide range of changes in the package.

The number of Australian-flagged vessels has declined by 34 to just 21 during the past decade. Only four now operate on international routes. This, as the member for La Trobe correctly pointed out, is an astonishing figure. She pointed out that it is an astonishing figure, and she is quite correct given the resources boom Australia is presently enjoying. I am so pleased the said member is using her spare time to read the Nationals policy platform. I urge her to read on. There are many other outstanding issues and policy ideas in the document to which she referred that would and will make a great boost to this nation yearning for good government. A number of reforms were recommended when the House of Representatives Standing Committee on Regional Development and Local Government tabled a report into Australia's coastal shipping industry in 2008. That committee was headed by the member for Ballarat with the member for Hinkler as her deputy, and its report was entitled Rebuilding Australia's Coastal Shipping Industry.The following year the minister formed a shipping policy advisory group, and a discussion paper was published in December 2010 as a result of advice given. The minister then, in February 2011, set up three industry reference groups to investigate different aspects of legislative reform: taxation, skills and training, and regulatory change.

Last September the minister declared he would introduce a shipping reform package and broadly summarised its contents. When he did so, scant detailed information was provided to the industry on exactly what form the reforms would take. This is not an uncommon practice for this government. Only this morning the health industry in general and doctors in particular expressed concern about their readiness for the electronic health record system which this government rushed through this parliament and which will take effect in just five weeks.

Also today, the independent Murray-Darling Basin Authority, commissioned by the government, released to the states its basin plan, which retains the 2,750 gigalitres of surface water to be taken from agriculture and given to the environment.

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

I call the member for Riverina back to the amendment.

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

This government often talks of the number of bills passed in this difficult, hung parliament. But it is one thing to pass legislation—good legislation—and another to blindly force new laws through which are onerous on those they affect and which do little to benefit the nation.

Just before last Christmas, the minister released the exposure draft of the coastal trading bill for public comment. Serious shortfalls were identified in the bill's drafting through this consultation process which resulted in a further draft being released on 20 February. The four remaining bills which comprise this package were also released at that time. Despite the multifaceted and extensive changes in the package, stakeholders were given only until 5 March to provide feedback. This is not time enough and not good enough by this government. In spite of this the minister bulldozed through the package, with some further revisions, on 22 March. Now we are debating it, and it is imperative that we get this right because, as the Leader of the Nationals and shadow minister for infrastructure and transport pointed out earlier, Australia's shipping industry must play a more important role in our freight network.

My Riverina electorate is landlocked, but, because it is such a productive region contributing more than $5 billion annually—that is just the Murrumbidgee Irrigation Area, by the way—to the Australian economy, the nation's shipping industry is vital to our export capabilities and certainly those of the MIA.

Australia has the fourth largest shipping task in the world. Sea transport carries all but one per cent of Australia's international cargo by weight and about 75 per cent by value. Domestically, ships carry about 25 per cent of our freight. With freight demands set to double by 2020 and to treble along the eastern seaboard over the same period, it is essential that shipping have a greater role in Australia's freight network. Shipping can move massive quantities of cargo across vast distances, reducing the number of trucks on already busy roads and relieving pressure on the rail network.

The five bills making up the shipping reform package are aimed at achieving a regulatory framework for coastal trading in Australia to boost growth in the number of Australian ships on our coast, enhancing the role of shipping as part of our national freight network and maximising the use of Australian flagged vessels. The package seeks to accomplish these objectives by bringing in a variety of financial incentives for Australian flagged ships, including company and income tax changes and hastening depreciation for ships, and by creating a second register of Australian ships to be known as the Australian International Shipping Register. This is available to ships which meet the eligibility criteria which includes the requirement to have two senior Australian officers on board. Also, the package abolishes part VI of the Navigation Act 1912 and thereby abolishes the current permit and licence system with a new three-tiered licence system.

The coalition referred these bills to the House Committee for Infrastructure and Communications and the Senate Committee for Economics for their consideration. The House committee was given inadequate opportunity to view the bills and assess the numerous submissions provided by various industry participants as to deficiencies in the bills. These bills, if passed, will have a major impact on Australia's coastal shipping industry.

The minister has called this reform of our shipping industry 'historic'. If it is so crucial and so necessary, why then was the House committee, supposedly acting with renewed transparency and due process in this new paradigm in which this parliament is supposed to be functioning, given time to have only a cursory glance at the package? This, on top of the fact that the Senate committee inquiry into the bills is not due to be tabled until June—long after debate in the House of Representatives. The lower house will not have the benefit of the Senate's advice before being expected to vote on the bills before us, and that is unacceptable. Ultimately, the value of this legislation is whether it will meet its objectives. Will the bills before the House re-energise the Australian shipping industry? Will the bills before the House lead to a substantial increase in the number of Australian flagged vessels operating on our coast?

The opposition spokesman on Infrastructure and Transport, who has more experience on these matters than anyone in this place, remains unconvinced.

Mr S Jones interjecting—

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

The member for Throsby, it is your turn next.

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

I hear the member for Throsby crying out, but even he would agree about Warren Truss's absolute experience in this field.

The coalition members on the House committee for Infrastructure and Communications felt the same as the opposition spokesman. Significantly, industry participants harbour concerns about these bills. They need to be listened to and they have not been. They have not been given enough time. There are fears that the Australian shipping industry could deteriorate to such an extent that our maritime cluster—the associated industries which rely on coastal shipping—will reach the point of no return.

Tom Pinder, one of the principals of Australian Coastal Shipping Pty Ltd—a wholly independent company whose prime objective is to service the needs of those companies and individuals with a requirement to transport cargo in the most economic fashion both within Australia and externally—made some pertinent remarks about these bills to the House committee. He said that a continuation down the path of a one-size-fits-all policy would eventually result in all of the current east-west freight task being diverted to what he termed the 'inadequate infrastructure of road and rail' with 'hugely increased costs and a totally detrimental effect on the carbon footprint of the country'. I know that the member for Throsby would not want that. For a government which has pinned its flag to the mast of a carbon reduced economy, Mr Pinder's warning needs to be heeded.

One thing for sure is that industry submissions to both the House and Senate inquiries argue that the new licensing scheme will increase the regulatory burden on the shipping industry. More bureaucracy is not an incentive for any industry, particularly for one in decline. The prospect of cheap imports replacing Australian manufacturing and industry is deeply concerning. Federal Labor seems intent on increasing the costs to manufacturing and industry to such an extent that it is no longer economically viable for some industries to continue. In what sort of country are we living when it is cheaper to ship sugar from Thailand than around the Queensland coast?

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

Shame!

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

I know that the member for Dawson would be extremely concerned about that. When it is less expensive to ship cement from China than from port to port? What does this say to our home-grown, proud Aussie manufacturing industry providing local jobs for local people? Then again, after the recent revelations that the government has approved a scheme to allow mining magnate Gina Rinehart to bring in 1,700 overseas guest workers for her Pilbara iron ore project, without making proper attempts to find local workers first, why should anyone really be surprised?

The government's regulatory impact statement acknowledges that freight prices might go up under this legislation before the House but ignores the fact that there are alternative supplies overseas which can replace our local industries and, disastrously, the jobs which go with them. Many customers have sought more information on the financial effects of the package on the cost of moving freight. Several submissions to the House and Senate inquiries demanded that a Productivity Commission inquiry be held to determine what impact this complex regulatory change will have on the Australian coastal shipping industry, the cost of freight and the costs to coastal shipping customers. The coalition supports this move, particularly in light of the abridged House committee inquiry which was held.

We would also ask that the Productivity Commission look into the implications on the cruise industry, because what this means to our tourism industry is also vitally important to consider. It is often forgotten that tourism is subject to the same requirements as the coastal cargo trade, and its concerns have been largely overlooked in the reform agenda. The coalition is committed to the Australian coastal shipping industry and agrees that it is important that it be revitalised. We do not, however, believe this package will achieve that aim and for this reason move the amendments to the package to improve the wording and the policy.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

It is a great pleasure to be speaking on the Shipping Reform (Tax Incentives) Bill 2012 and to have sat in on the last five or ten minutes of the member for Riverina, who was voicing his party's concerns on the introduction of this legislation. I must admit I am not surprised, because, after 11 years in government, their total contribution to shipping policy was a crippling national strike. Their side of politics brought in the dogs—blokes in balaclavas—who drove out the workers and drove our country into industrial mayhem for literally months. I am not surprised at all that their contribution to this debate is as vacuous as their 11 years in government were when it came to lasting reform of the shipping industry.

We do need a strong shipping industry, and our shipping industry needs revitalisation and reform. The package of legislation before the House today goes part way to delivering on that reform. The legislation is the product of a long and thorough process of consultation and review, a process that might have escaped the member for Riverina and the member for Dawson and many others on their side of the House. In fact, I am not surprised, as the Deputy Leader of the Opposition and the responsible minister seems to have gone to sleep at the wheel. When it comes to proposals concerning infrastructure, we have not heard one question in the House which reflects his general portfolio responsibility.

Mr McCormack interjecting—

The member for Riverina does his party proud. I know it is a tough job defending your shadow minister, but you have done an admirable job.

The consultation process which they have missed on that side of the House has involved representatives from across government, with Treasury chairing the fiscal group. Exposure drafts of all of the bills were released for public comment, and a further roundtable was held in February to enable industry to work through the details with officials. The government is hardly rushing these bills through the parliament, as those opposite would pretend. There would be no Australian ships left by the time the opposition ever decided what reform actually should entail. In fact, their contribution to policy seems to be, 'Let's have another review.' Maybe that is their plan. Why else would they oppose a zero tax rate and a strong Australian shipping industry? It just does not make sense.

The shipping industry has barely survived a decade of policy inertia by the previous coalition government. These measures represent critical industry reform and policy development. As an island nation, shipping has always played an important part in our nation's history and has always played an important part of the economy in my electorate of Throsby. Australia is the fourth largest shipping task in the world. Today around $200 billion worth of cargo is moved annually. However, today there are only 22 Australian registered major trading ships plying our waters. That is down from 55 in 1995. Of the remaining ships, only four—and they are all gas tankers—are dedicated solely to international trade. In the past decade, the Australian fleet has gone from 55 ships down to 21, with only three operating on international routes. In a country where over 99 per cent of our trade is moved by ships, there will soon, if we do not act, be no fleet to revitalise. That is why we need to act now, or we will not have a shipping industry left at all.

Just fifteen years ago the story was different. Then, the Australian merchant fleet comprised around 88 vessels and employed around 5,500 officers and crew. While international competition has taken its toll on this industry, it is also true that government policy settings have not been good. That is why this package of legislation before the House today is good news for the Australian shipping industry. What we are doing is creating an economic and regulatory environment that will revitalise and sustain growth and productivity in our shipping industry. The reform package is in the best interests of our economy, our environment and our security.

I know this because I represent an electorate that takes in Port Kembla, a port which has operated continuously since 1883. The reform package is great news for electorates like mine. Recognised as of the Illawarra's key economic and commercial assets, Port Kembla directly and indirectly sustains over 3,500 jobs and contributes close to $420 million annually to the regional economy. Port Kembla recently underwent a major expansion. It diversified its trade base to include general and break-bulk cargoes, containers and motor vehicle imports. The expansion development included the construction of three new berths and the development of more than 50 hectares of land. This has allowed the port to become the largest vehicle-importing hub in Australia. Port Kembla is now also the principal grain export port for producers in southern and south-western New South Wales, including producers who come from the member for Riverina's electorate. Port Kembla is one of three major ports in the state of New South Wales. The diverse commodity base of the port today reflects the growth of the region and its capacity to service the growing south-western Sydney market and parts of the New South Wales inland.

The package of five bills today includes important reforms which will have a direct bearing on the economy of my electorate in the Illawarra. The government's Stronger Shipping for a Stronger Economy legislative package delivers on our 2010 election commitment to revitalise the Australian shipping industry. The first bill in the package, the Shipping Reform (Tax Incentives) Bill 2012, contains the taxation elements of the reform package. These are aimed at revitalising the industry by making it more globally competitive and attractive to investors, by providing a zero tax rate for Australian shipping companies. That is right: a zero tax rate for Australian shipping companies. In addition to that, it provides accelerated depreciation of vessels via a cap of 10 years to the effective life of those vessels; rollover relief from income tax on the sale of a vessel; an employer refundable tax offset in relation to seafarers; and an exemption from royalty withholding tax for payments made for the lease of shipping vessels.

The second bill is the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012. This goes to the creation of a register through the shipping registration amendment. This will enable Australian shipping companies to compete on a level playing field internationally, by removing the cost disadvantages experienced by Australian registered ships when competing in the global market. Key elements of the register go to a mixed manning register—that is, internationally registered vessels must employ a minimum of two Australian crew, preferably the master and the chief engineer; a provision for international employment terms and conditions, which includes workers' compensation, which ensure that workers on these vessels will receive internationally competitive rates of pay and conditions, consistent with the Maritime Labour Convention and other international labour treaties; in addition, access to tax exemption and other tax incentives. The same environmental, safety, and occupational health and safety standards will apply to AISR vessels as to first register vessels. Finally, a seafarers bargaining unit must be formed for the purposes of negotiating terms and conditions for seafarers on international voyages, and the bill provides that those collective agreements must form part of the seafarers' individual work agreements. These arrangements strike the right balance between competing on a level playing field internationally and ensuring Australia's domestic maritime industry can grow.

The third bill, the Coastal Trading (Revitalising Australian Shipping) Bill 2012, will repeal the current coastal trading arrangements in part VI of the Navigation Act 1912 and implement a new three-tier licensing system. The new regime will balance support for Australian shipping while establishing clear boundaries for the role of foreign ships in the coastal trade. The new regime will not result in the 'closing of the coast'. Australia has one of the most liberal domestic shipping regimes, with 30 per cent of coastal cargos being carried on foreign vessels—that is, 470 permit ships at present.

The fourth bill is the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012. The transitional provisions set out in this bill are necessary to enable a smooth transition from the old regulatory regime to the new framework. This will ensure that the supply chain will continue to operate as the system is being bedded down.

The fifth and final bill is the Tax Laws Amendment (Shipping Reform) Bill 2012, which provides a number of tax incentives designed to stimulate investment in Australian shipping and encourage Australian ownership of ships and ship operations. These incentives include: an income tax exemption for ship operators, which is a zero tax rate for Australian shipping companies; the provision for accelerated depreciation of vessels via a cap of 10 years, to the effective life of those vessels, which is a reduction from 10 years, halving that rate; a rollover relief from income tax on the sale of a vessel; an employer refundable tax offset for seafarers; and an exemption from royalty withholding tax for payments made for the lease of shipping vessels.

Taken together, these are important bills that will go a long way to the revitalisation of the Australian shipping industry in Australia. As you can see, and as just about every speaker who has contributed to this debate has made the observation, with over 99 per cent of our trade task being reliant on international shipping and being one of the most shipping-dependent nations on earth—being an island nation—and very trade reliant, it is absolutely critical that we have a vital and revitalised shipping industry in this country.

After 11 years of neglect by those opposite I congratulate the minister for having the fortitude to bring this reform process into the House. I congratulate him for having undertaken extensive consultations with industry and for ensuring that all the key stakeholders have been involved in the preparation of the reports, the consultation process, and have had access to the exposure draft of this legislation and have had their input to the exposure legislation considered. I congratulate him for ensuring that, at the end of that process, we have five excellent bills to bring before the House, which will go a long way to ensure that we have a vital shipping industry now and into the future. That will be a good thing: a good thing for all Australians and a good thing for the port at Port Kembla in my electorate of Throsby—hopefully employing more Australian seafarers and ensuring it has a vital future and continues to contribute enormously to the future of the economy in the Illawarra. I commend the legislation to the House.

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

I am glad the member for Throsby is pleased with what he can do for his port at Port Kembla. But for the canefarmers in North Queensland, that I represent, this bill is an absolute affront. In rising to address the Shipping Reform (Tax Incentives) Bill 2012—which has been very rushed in this place—and all of the associated bills, let me start by pointing out some of the differences between what is planned and what actually happens in this place. I do this because what the government says and what it does are often completely different things. Doing the opposite of what it says it will do is not always a deliberate strategy of this government. We know they sometimes have a genuine desire, I do admit, to achieve better outcomes for all Australians. I have no doubt they sometimes have good intentions, but through incompetence, poor judgment, rushing a decision—like they are in this case—or just plain horse-trading, often with the Greens or with the unions, they end up shooting themselves in the foot.

In this bill, they may well have had some good intentions to start with. It is obviously designed to look after the best interests of the Maritime Union of Australia and that is to be expected from a Labor government. But I do not think the government set out with the intention of inflicting serious harm on the industries that keep this nation afloat. Unfortunately, the Labor government just does not care about any harm it inflicts on any industry. It is all good fun until someone has an eye out. When the time comes that the regulations in this bill start costing jobs—which they will—and there are simply not enough people to keep paying Labor's taxes, they will come crying to this place, pointing the finger at everyone else rather than themselves.

There are a few things these bills will do—and revitalising the Australian shipping industry is certainly not one of them. This amendment will add another layer of burden, of red tape, over the entire shipping industry. I can assure you, adding red tape is not going to revitalise anything. In just over 4½ years Labor governments, under the former Prime Minister the member for Griffith and now the current Prime Minister, have introduced more than 18,000 regulations—18,000 pieces of red tape. That equates to about 11 new regulations every single day and here is another raft of them with these bills. No wonder productivity is grinding to a halt.

Right now, there is a system in place where non-Australian registered ships are granted permits to operate single and continuous voyages in Australian coastal waters. Under this new scheme, legislation requires any foreign vessels seeking a temporary licence to carry out a minimum of five voyages in the year. Well, up to 30 per cent of domestic coastal shipping is made up of foreign vessels operating on single and continual voyage permits. So this regulation is going to have quite an impact. In today's world there are global shipping companies working throughout all the world's ports. Ships are the links between exporters and importers, in many cases, and between supply and demand. They go to wherever the supply is and they deliver to wherever the demand is. If the government excludes market suppliers who wish to carry out a single coastal voyage, what the government is doing is effectively reducing competition. Is any competitive legislation going to revitalise the Australian shipping industry? I would say, hardly—it certainly will not. In fact, the reduction in competition was identified as a significant source of cost increase in a Deloitte Access Economics report that was prepared on the likely impact.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour. The member for Dawson will have leave to continue speaking when the debate is resumed.