Wednesday, 29 October 2014
Statements by Senators
I fear my topic is somewhat more mundane than Senator Lambie's, but I would like to speak to the chamber today about the costs and impacts of coastal shipping on industry and business here in Australia, particularly about the impacts of the so-called reforms brought in by the previous Labor government which have catastrophically failed to achieve their set objectives while doing nothing but hurt Australian industry. Given that my home state of Tasmania is so dependent on shipping for movement of goods on and off the island, that impact has been significantly compounded for us. Even setting that to one side, the impact on a national basis has been quite striking.
The Labor Party, when they brought these measures in, said that they wanted to build an Australian shipping industry. That has failed. There are in fact 64 per cent fewer vessels on the Australian coastline. Capacity has fallen significantly since these measures came in. We are actually moving less freight around the Australian coastline following the introduction of these reforms. Why would there be more vessels when the amount of freight being moved around the Australian coastline is declining? It is moving to the roads, increasing congestion on our highways, instead of being moved in a more efficient and much less carbon intensive way around the Australian coastline. There are also fewer voyages by foreign flagged vessels moving around the coastline—and two million tonnes less freight. The bottom line of all this is significant cost to Australian shippers.
Last night I was talking to a colleague from South Australia, where they have a significant timber industry. They want to get that timber into the Brisbane market. It is not viable for them to do that because of the cost of coastal shipping. It puts Australian businesses out of the market and promotes the import of timber from New Zealand and other overseas countries. Here we are with a resource and perhaps some of the most efficient timber mills in the country—they are global-scale mills—but they cannot compete in the Australian market because of the cost of logistics. It is absolutely absurd.
For Bell Bay Aluminium in the north of Tasmania the cost of sending their product from Tasmania to Queensland, prior to the coastal shipping laws coming in, was $18.20 per tonne. It is now $29.70. It has gone up by over 50 per cent, yet the rate offered by a foreign vessel remains at $17.50. Where previously the local vessel was at least close to the rate of an international vessel—and the international vessel cannot work on the run with the flexibility it did before because of the absurd regulatory regime which sits in place now—it is now costing that business an extra $4 million a year, an increase of 63 per cent. Why are we doing that to Australian businesses? It is no wonder that that business is considering its future—as so many others in this country are doing.
Then there is another business, one which has had a lot of publicity in Tasmania in recent times—Simplot Australia. They have had an additional $550,000 a year added to the cost of their shipping as a result of the coastal shipping changes. They have lost markets. Again, product is coming in from overseas when it could quite reasonably be supplied out of Australia—out of Tasmania. It is not being supplied out of Australia because of the changes the Labor Party made to the coastal shipping arrangements. Why did the Labor Party make those changes? Quite simply, it was a sop to their union mates. The changes that were made were a complete and utter boondoggle. They were not necessary, they do not achieve anything—in fact they work against what they were supposed to be achieve—and they are disadvantaging Australian businesses.
The submission by the Australian Peak Shippers Association, representing companies like Sunrice and Bega, said:
When it is cheaper to buy product in New Zealand and land it in Brisbane for blending than it is to purchase the equivalent Australian raw material from Victoria and ship to Brisbane, or indeed when it is cheaper to ship product in containers from Melbourne to Singapore than it is to ship the same from Melbourne to Brisbane, it is not hard to realize that our Australian exports, who are competing with Singapore based companies for the same export market are finding it tough to do so.
It is cheaper to bring product from New Zealand to Brisbane than it is to bring it from Melbourne to Brisbane, and so Australian businesses are losing out. Another Tasmanian business that has had an additional cost to shipping because of these changes of $1 million a year has told me that it is cheaper for them to bring the equivalent product from New Zealand to every single port in Australia except Melbourne than it is to take it from Tasmania—and they get freight equalisation from Tasmania as well. This is what the changes have done to the cost of shipping around the country.
How do I say to my businesses in Tasmania that we want them to be competitive, we want them to be conducting best practice, when the cost of their getting product off the island is so uncompetitive internationally? We have to get rid of this boondoggling. We need to do something about it. It cannot be that we are talking about a $29.70 per tonne rate for shipping from Launceston to Brisbane or to Gladstone when the international rate is $17.50. Our logistics have to be internationally competitive, otherwise all we are doing by our regulatory process is imposing cost into the supply chain that puts our businesses out of business. It makes them uncompetitive. They are losing markets. That business talked to me about their $1 million additional cost and it being cheaper to bring product from New Zealand to every port in the country except Melbourne than it is to bring it from Tasmania. It is absurd that you can bring product from another country to every port in this country cheaper than you can bring it from Tasmania. They have consequently lost markets. What does that do to their structural affordability? Of course they lose productivity, their overhead costs as a proportion of their overall business costs go up and it makes them less competitive in the market—and then they reconsider their business. That is exactly what Simplot is doing right now.
By reducing these costs we can make our own businesses here in Australia more competitive in the market. Whether you are bringing timber from South Australia to the burgeoning housing market in Brisbane, whether you are bringing dairy product from Melbourne to blend into manufactured product in Brisbane, whether you are taking vegetables from Tasmania to any port in the country or whether you are taking other products from Tasmania to any port in the country and you cannot do it cheaper than you can from New Zealand, it is absurd. It is time we made some changes to this boondoggle.
The Labor Party promised us a bigger shipping industry but we have fewer ships. We are moving less freight around the Australian coastline. We are putting our Australian businesses at a competitive disadvantage. Why do we allow this to continue? We as a government say that we want to help Tasmanian industry and business grow. One of the first things that we need to do as part of that process is get rid of the absurd regulations that provide a disincentive for competitive shipping on the Australian coastline. We need to have the most competitive services available—that is what the market ought to be doing, but it is not. In fact, the measures put in place by the previous government are hurting Australian business, they are hurting Australian industry, and they are keeping Australian business and Australian industry out of the Australian market, which is a complete absurdity. It needs to be changed.
I want to use this time to again highlight the real risks to Tasmania of Tony Abbott's broken promise to not change the GST. Tasmania stands to lose around $700 million if a per capita model is introduced. At a time when the state Liberal government is hell-bent on cutting 800 public sector workers out of Tasmania over the coming months, the Tasmanian people and the economy in Tasmania cannot afford any more savage Liberal cuts. It would be a $700 million cut if the GST were changed to a per capita model and that would mean job losses, on top of the 800 public sector workers that the current Liberal government is choosing to cut, equating to 800 doctors, 3,000 nurses, 500 allied health professionals and 100 child protection staff combined.
The member for Braddon, Mr Brett Whiteley—despite being more than happy to beat his chest in March of this year when a minor party was promoting the per capita distribution model—was alarmingly silent when his own Prime Minister put changing the GST back on the table. It is time for Mr Whiteley to come out of hiding and fight against a move that could strip the Tasmanian economy of $700 million a year. Before the election Mr Tony Abbott gave a firm commitment to the existing GST arrangements. He said:
The Coalition fully supports the existing GST arrangements. We will not change them.
But after the election Mr Abbott yet again walked away from an election commitment. Make no mistake, the threat to Tasmanian public service jobs of Tony Abbott and the Liberals fiddling around with the GST is very real. Now, more than ever, we need a strong response from the Tasmanian Liberals. The most fundamental duty of a member of parliament is to fight for the interests of the people who elected them. Mr Whiteley, the member for Braddon, now has to come out against the Prime Minister—he needs to be strong and vocal, not silent, about these repressive GST changes and ensure that the government of which he is a member does not implement changes that will affect the long-term viability of Tasmania or, if there is a change to a per capita model, he needs to ensure that we do not lose 800 doctors, 3,000 nurses, 500 allied health professionals and 100 child protection staff combined. That is too much of a risk to my state of Tasmania and we need to make sure that the representative from Braddon, Mr Whiteley, is on top of this issue and fighting against that change.