Mar 4, 2015

Australian Coastal Shipping

Mr ALBANESE (Grayndler) (09:15): I am pleased, today, to speak on behalf of the Australian Labor Party on this legislation, the Australian River Co. Limited Bill 2015. The bill gives effect to the abolition of the Australian River Co. Limited, ARCo, which was announced in the 2014-15 budget. It allows for the transfer of functions, assets and liabilities from the Australian River Co. to the Commonwealth ahead of the Australian River Co.’s deregistration. The bill also contains provisions to ensure that the Commonwealth is the Australian River Co.’s successor at law in relation to contracts and other instruments including insurance policies.

This is an administrative piece of legislation, which the opposition will be supporting as it is certainly noncontentious, but it does raise the history of the Australian shipping fleet around our coast. It raises that history in the context of previous governments, of either political persuasion, which have certainly seen the need for an Australian flag to have a presence on an island continent such as Australia where 99 per cent of our exports are carried by ship, and where of course there are a range of advantages in having an Australian shipping fleet.

The Australian River Co. was originally created as the Australian Coastal Shipping Commission way back in October 1956. At that time it operated about 40 ships. It became the Australian Shipping Commission in 1974, and was subsequently incorporated as ANL Limited. In 1989 it became the Australian National Line, and it finally took on its current name in 1998. The original purpose of the company was to establish, maintain and operate, or to provide for the establishment, maintenance and operation of, shipping services for the carriage of passengers, goods and mail. In 2002 the then Howard government wrote to the board requesting that the company be managed with a view to it being wound down. Its operations have been geared towards its winding down ever since. The company arose from a time when there was a view that the only way to secure an Australian shipping presence around our coast was to have a directly government owned and operated fleet. Of course, over a period of time, that has changed.

The Labor Party certainly share the view that there is no need for a directly government owned Australian shipping fleet. That is a service that is best provided by the private sector with an appropriate competitive framework. However we certainly maintain the view that it is in Australia’s national security interest, in our economic interest and in our environmental interest that there be that Australian flag presence not just around our coast. We would like to see a far greater Australian shipping presence around the globe, carrying Australian resources and Australian goods, and of course carrying goods back to Australia. We need to be a shipping nation, not just a shipper nation—a distinction which is very important in terms of a starting point.

The company itself ceased to trade in August 2012 when the last of the two ships that it had, both bulk bauxite carriers, were sold in 2012. According to its last publicly available annual report, as at 30 November 2013, its only ongoing operations related to the management of legal and insurance matters for the company, particularly workers compensation liabilities. The company has no employees and no premises. It does still have a board comprising three members and a company secretary. Upon deregistration, the remaining activities, assets and liabilities of the company will be moved and taken on by the Department of Finance.

Given that this bill is about the proper process of winding up a company in accordance with decisions made by previous governments, the opposition will be supporting this bill. But we do believe this is an opportunity to remind ourselves of the important role that an Australian shipping industry has for our national economy, for environmental protection, including of the Great Barrier Reef, and for national security. I believe that this is a debate that requires far greater consideration by members of this House and the other place than has taken place up to now.

A briefing was given to industry months ago about proposed legislation from the government that has not been exposed to a public exposure draft or to any public process. I think that is not appropriate. It is important that we have a debate which is hopefully beyond partisan lines about whether we want to see the Australian flag on the back of ships around our coast, because that is literally under threat. If we are complacent, that will disappear. That is why, when I was the minister, we undertook a program of reform for Australian shipping.

The first thing we did was invite the House of Representatives committee to do a report into Australian shipping.

Ms King interjecting—

Mr ALBANESE: Indeed it was chaired by the member for Ballarat. The deputy chair was the former member for Hinkler, someone who I have the greatest respect for. What was significant about that report was that it was bipartisan and unanimous. It was this parliament working at its best. All sides came together on the basis of evidence before a committee and made recommendations that were then put in place by the former Labor government. The reforms were absolutely vital, given that the number of Australian flagged ships around our coast had fallen during the period of the Howard government from 55 to less than half of that, 22, and was ready to fall down to just 19 due to decisions that had already been made prior to the change of government in 2007.

I must say that the position that was put forward by the member for Hinkler was consistent with the general approach that the National Party and its predecessors have tried to take in terms of recognising the national economic interest, rather than the view that sometimes their coalition partners have of pretending that there is this absolute free market that operates out there when, in an area like shipping, the analysis shows that Australia, including after the 2012 reforms, has the most open market in the world.

Many people would look towards the United States of America as the free market leader in the world. Well, have a look at the way that it operates its shipping industry. You cannot, if you do not have the flag of the USA on the back of your ship, take goods from San Francisco to Los Angeles or anywhere else operating around the coast. Not only that, the ship has to be built and maintained in the United States of America. This defends jobs, but is also a recognition by the US that there is a real national security issue by having a merchant fleet. There is a relationship between the merchant fleet operations and our defence operations, which is something that any student of history who looks back—as we are this year commemorating the anniversary of Gallipoli in World War I, and when you look at the operation in World War II, or more recent operations—would know: there is a direct linkage between the two. There is a real national interest—and the US recognises that, as do all of our competitors. There is no advanced nation in our region, in Europe or in North America that has a free-for-all around their own coastline. But that is a direction that the current government is heading towards with the discussions they have had with industry—and that is of real concern.

The 2012 reforms were the result of recommendations from a bipartisan committee. The reforms were a comprehensive plan that looked at coastal trading around our coast and our international register and that looked at workforce issues. It looked at it from a perspective not of retreating back to a protectionist model, but of looking at an expansive way in which an Australian flagged ship could compete with foreign flagged ships, whether it be around our coasts or in the international trading sector. It was very much not a protectionist model, even though many of our competitors do have either an absolute protectionist model such as in the United States, or a relatively protectionist model such as in our region.

We established a shipping advisory task force that involved industry, including the Australian Shipowners Association and Shipping Australia. It involved the unions. It involved major companies such as Rio Tinto and BHP Billiton. It involved major operators such as CSL, Maersk and other companies that are involved in the shipping sector. Significantly, it came up with a plan that was then released for public comment. We had exposure drafts of legislation. We had a process whereby there were subcommittees to look at taxation issues that were chaired by the Department of the Treasury. We had industry chairing the task force that looked at workforce planning issues. We involved the Navy because we recognised that they have the skills that are required in our merchant fleet. There is a direct relationship and there is a lot of transfer between the two—as there is in the aviation sector between people who will get training in the air force and then go into the private sector. The same thing happens in terms of our shipping industry.

An Australian shipping industry is vital for areas such as controlling our ports. Our harbour masters, by and large, will be people who started at the bottom as workers and got skills as they went through their working life. That is why it is absolutely extraordinary that this is being walked away from due to, I believe, a false assumption that somehow this has everything to do with the Maritime Union of Australia. These reforms are supported by industry, the workforce and the sector, but they are being undermined and walked away from with real consequences.

Our reforms sought to establish a level playing field.    They did this by requiring foreign-flagged vessels operating on Australian domestic trade routes to seek permits. The permits required that, if an Australian-based ship was available, an Australia-based ship would have the opportunity to bid for the work. They also required those vessels to take on Australian crew at senior levels and as trainees. They certainly were not protectionist. There was other legislation that required ships operating on Australian domestic routes, even if they were foreign flagged, to pay Australian-level wages. This is at the core of the assault that is going on at the moment. It is misguided, it is not thought through and it is not in the national interest.

If a truck that is owned and operated by a Philippine company wants to take goods from Sydney to Melbourne, there would, I believe, be no-one who would argue that the driver of that truck should work under the standards of the Philippines in terms of the training for the truck driver, the fatigue laws and the wages. They would argue that the wages, training and other conditions needed to be Australian level. Otherwise what we would have is people driving up and down our highways—particularly in regional communities—earning $2 or $3 an hour. That would be absurd.

It is just as absurd to argue that the people who work on a ship going from Sydney to Melbourne—an Australian domestic task, carrying Australian goods from one Australian port to another Australian port—should not be paid Australian wages, that they should be paid $2 or $3 an hour, with fatigue laws being applied from a foreign jurisdiction rather than an Australian jurisdiction. This is essentially the argument that the current Leader of the Nationals and Deputy Prime Minister is putting forward, and I think that it is very short-sighted indeed. By all means, be as critical as you like of the Maritime Union of Australia and engage in the argy-bargy of politics, but do not argue that the idea of attacking the MUA is to be achieved by replacing Australian workers with non-Australian workers who are paid non-Australian wages. It is an extraordinary proposition, but at its core that is the case that the government is putting forward.

The maritime sector does provide jobs for thousands of Australians—at least 2,000 seafarers plus many more land-based workers associated with the industry. It also supports skills. There is good economic reason to defend these jobs and these skills. The minister clothed his planned changes as the elimination of red tape, but that is, of course, nonsense. This government simply wants to get rid of this Australian industry in line with some bizarre anti-union ideology. Yes, people who work on the ships tend to be members of unions. That does not make them bad people. That, indeed, is a recognition of the history of that industry and a recognition that, when you work in a workplace such as that, the consequences of a workforce not acting collectively are bad for the company and are bad for the national interest. When we have wages being driven down, we see what the consequences of that are in terms of a deskilling—but that is their position.

This is Work Choices on water—nothing more and nothing less. What a lack of ambition for this country. We have a government that wants to eliminate Australian jobs and replace the Australian flag on the back of ships with those of foreign ships. We believe that we should be supporting our industry. I want to see Australian flags flying from Australian vessels, that carry Australian goods and that benefit the Australian economy. Indeed, I would like to see the Australian flag flying proudly over the shipping lanes of the world, which is what our reforms were aimed at—aspiring to its growth.

The red tape argument that the minister puts forward is a red herring. Many in the industry have told us by their submissions to the coastal review that the paperwork involved in the new system put in place from 2012 is basically the same as the former system. You do not have to take my word for that. Let us have a look at the submission by CSL, which is the largest dry-bulk shipowner in Australia—you should go for the biggest. In its submission to a 2014 departmental inquiry into shipping laws, CSL said that it neither opposed nor supported the current arrangements but was more interested in the impact on shipowners from another round of reform, another round of changes. Referring to coastal trade, CSL made this telling point.

The cost impost on Australian shippers of engaging coastal vessels on coastal trades since the introduction of the Coastal Trading Act in July 2012, as a standalone piece of legislation, is minimal. When compared to the previous Navigation Act 1912 and associated Ministerial Guidelines for Granting Licences and Permits to Engage in Australia’s Domestic Shipping, as originally introduced by the Howard government, it is seen that there has been little cost increase…. The administrative burden of the Coastal Trading Act has slightly raised business administrative costs, however these are not significant.

What is significant about this is a couple of things. One is that you have the largest operator saying ‘no significant increase in costs at all’. You also have in that quote a reference to the Navigation Act 1912, which was in place for 100 years until we reformed Australian shipping. It had been put in the too-hard basket for 100 years. Prior to our legislation, there were all sorts of extraordinary provisions in the act—provisions that allowed a ship’s captain to literally shoot—and I quote from the legislation—’a lunatic on board’. And they would be free from prosecution if they were to do so. There were all sorts of provisions in there that had been appropriate in 1912. But the parliament put it in the too-hard basket, because shipping is out of sight for most of the time.

Can you imagine having a road safety act, a trucking industry act or a railway act that had been in place with all of its provisions since 1912? What we did was embark on the most significant reform process in a century. We got the support of employers, industry and employees, and that reform came in in 2012 and was immediately undermined by those opposite. For the reforms to work, they needed to be given time. The time in which a business can make a decision to invest in infrastructure, such as having an Australian flagship operating on the international trade routes, is significant. You cannot make a decision one day and have a ship operating the next day. But, because of the uncertainty in the industry created by this government’s ideological obsession with anyone who is a member of the Maritime Union of Australia, you have had businesses saying very directly, ‘We would want to engage in investment to have an Australian flagged ship because of the incentives that were put in place to create a level playing field with our competitors such as Singapore, and yet we have not done so because we are not sure that the legislation will still be there in a year’s time or two years time.’ These investments are investments for decades, not for a year or a term of parliament.

That is why the reforms that we had—for example, the creation of the Australian International Shipping Register; of a zero rate of taxation for the Australian flagged ship; and of a zero rate of taxation, on a personal level, for Australian-based seafarers—were the way to go—not a protectionist model that said, ‘Unlike our competitors, you must have our national flag on the back of your national operator ship, in terms of exporters, as many of our competitors do,’ but a model that said, ‘We will look at international best practice and we will enable an Australian flagged ship to have a neutral competitive position with our major competitors such as Singapore.’

We convinced Treasury and Finance—not an easy thing to do, to convince Treasury and Finance—of a zero rate of taxation for a company and a zero rate of income tax for a seafarer. Why did we do that? Because when you looked at the detail it actually was not a cost, because at the moment the Australian seafarers working on a ship with a foreign flag somewhere else are not paying Australian tax anyway. An Australian company is not paying tax, because there are not Australian companies significantly involved in international trade. So this was a smart move.

Then you look at the environment. You look at the incidents that have occurred. On 11 March 2009, off Queensland’s Sunshine Coast, the Pacific Adventurerlost the first of 30 shipping containers containing ammonium nitrate. At least one of those containers damaged the ship as it tumbled into the water. A 60-kilometre-long oil slick hit the beaches of the Sunshine Coast and the northern part of Moreton Bay. The cost of cleaning up that spill reached $34 million. Just a year after, on 3 April 2010, the Shen Neng 1 ran aground on the Great Barrier Reef east of Rockhampton. The vessel was 10 kilometres away from normal shipping lanes. It created an oil slick more than three kilometres long. There was no Australian pilot on board. It could have been an absolute disaster that would have cost billions—not millions but billions. An incident on the Great Barrier Reef would have such an impact on our industry. There was no Australian flag there either. Earlier this month, police arrested the captain of a Chinese coal ship for sailing through part of the Great Barrier Reef Marine Park without a pilot. Police said the bulk carrier, China Steel Developer, sailed through Hydrographers Passage off Mackay without a pilot as required under law. Since 2004, Australian inspectors have detained 122 international flagged oil tankers because they were overloaded or had defective equipment. In the same period, they detained no Australian flagged oil tankers. That is why it makes absolute sense. Have a look at the incident in New Zealand off Auckland that almost shut down the economy of the North Island as a result of that incident there. This is a huge issue.

In Queensland, the government’s rhetoric is already resulting in Australian jobs being lost. Coral Princess Cruises have been transferred to Singaporean interests. To quote the company’s founder, Tony Briggs:

The decision will cost Australian jobs and tax receipts … Mr Briggs said the company was enjoying record patronage and had been considering building another $30 million cruise ship but was concerned by cabotage reforms he believed had already been made.

He said that a foreign-crewed and Bermuda-flagged cruise ship, the Caledonian Sky, began operating last year on the Kimberley coast of Western Australia on an itinerary that competed directly with Coral Princess Cruises and a big domestic fleet.

Mr Briggs said changes to cabotage were stupid.

“There will never be another passenger ship built in Australia if there is no certainty on how we can operate,” …

He continued: ‘It’s exporting jobs.’ (Time expired)

 

Contact Anthony

(02) 9564 3588 Electorate Office

Email: A.Albanese.MP@aph.gov.au

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