Coastal Trading (Revitalising Australian Shipping) Amendment Bill 2017 – Second Reading – Tuesday, 14 August 2018
It is about more than jobs and skills; there are also very sound national security and environmental reasons for having an Australian fleet. Firstly, there are clear synergies between our naval and merchant fleets. Defence experts have long recognised the importance of maintaining a domestic maritime workforce that ensures Australia has a pool of highly skilled labour that can be quickly mobilised during times of war or other national emergencies. A national workforce forum that was established with a former Public Service Commissioner as chair, involving industry, the Navy and the agricultural sector, came up with a consensus proposal to advance workforce development with a very modest contribution from the Commonwealth, which was cut to zero as one of the first acts of the incoming Abbott government. Australian seafarers also undergo stringent background checks to ensure they pose no security threat. We hear a lot from this government about national security, including relating to people on boats, yet this government is prepared to have overseas seafarers whose backgrounds are a mystery on ships around our coast and in some cases in our harbours and our ports.
Secondly, Australian seafarers are familiar with our coastlines and have a vested interest in the protection of our world renowned environmental assets such as the Great Barrier Reef. All of the significant maritime incidents around our coast over recent decades have something in common: a foreign flag on the back of those ships. Be it the Pacific Adventurer or the Shen Neng, an enormous ship that ploughed into the Great Barrier Reef off the coast because the captain literally forgot to turn through the channel, the major maritime accidents that have occurred in our waters and New Zealand’s in recent decades have involved foreign flagged vessels crewed by foreign seafarers.
There are good economic, national security and environmental reasons for having an Australian fleet, which is why the former federal Labor government was so determined to rebuild Australia’s shipping industry following years of neglect. Our goal was simple: we wanted to see the Australian flag flying on the back of Australian ships with Australian seafarers carrying more Australian goods around the Australian coastline. We wanted to see an international fleet with the Australian flag on the back of it and with Australian seafarers.
After extensive consultations with all sections of the industry we put in place far-reaching reforms that were designed not as a protectionist model but as a model which reduces the costs faced by Australian shippers in order to level the playing field with their international competitors. The 2012 reform package amended legislation from the Navigation Act 1912. The major legislation governing shipping in this nation had been in place for literally 100 years. There were all sorts of arcane provisions in that legislation, such as the fact that a captain could be free from prosecution if they literally murdered a lunatic, defined in the act, around the coastline. That was part of the legislation that was still in place, which was derived not of course from 1912 but really from Westminster in the 19th century. Yet it hadn’t been updated.
We had a comprehensive update. The package included a zero tax rate, more-generous accelerated depreciation arrangements, rollover relief for selected capital assets, new tax incentives to employ Australian seafarers, and an exemption from the royalty withholding tax for bareboat leased vessels. To further strengthen the local industry, an international shipping register was created, allowing operators of Australian flagged vessels to employ mixed Australian and foreign crews on internationally agreed rates and conditions. These measures were based on extensive reform programs that had already been implemented by other maritime nations, including the United Kingdom, Japan, China and Denmark. For example, when the UK government introduced a tonnage tax in 2000, its fleet almost doubled in size in just the next seven years. So, while others were employing policies to keep their industry afloat, our industry was sinking into oblivion. Importantly, Labor’s changes did not preclude the use of foreign vessels. They simply required that firms needing to move freight between Australian ports first seek out an Australian operator. When none was available, foreign vessels could be used, as long as they paid Australian-level wages on domestic sectors.
Our efforts to revitalise this country’s shipping industry didn’t stop there. We also enacted that first major rewrite of the nation’s maritime laws in a century. We’ve made sure that oil companies pay for any and all damage that their ships may cause. We developed Australia’s first national ports strategy, and we replaced a myriad of confusing, often conflicting state and territory based laws and regulations with just one national maritime regulator, the Australian Maritime Safety Authority, administering one set of modern, nationwide laws. However, for Labor’s suite of reforms to work, they needed time. Because they relied upon investment—and investment decisions don’t occur over a month or even a year; they occur long term, for the life of the vessel—they needed that certainty. Before the reforms even took effect, the coalition sought to undermine them. Their attacks were calculated to create uncertainty and doubt in the minds of those considering investing in the Australian industry as to the durability of the regulatory changes and the new tax incentives. Still, some companies, like SeaRoad in Tasmania, certainly did invest in new vessels. But, not satisfied with white-anting Labor’s reforms in opposition, once elected the coalition moved quickly to scrap them altogether and dismantle what remained of the industry.
All of us want to reduce the cost of doing business in Australia, but at what cost, if the cost is the destruction of a strategically significant industry and the loss of a highly skilled workforce? In the end, that will put up costs over a period of time if you don’t have Australian competitors. The legislation put forward by then minister Warren Truss put ideology ahead of the national interest. Contrary to the coalition’s repeated claims that their proposed changes were designed to eliminate red tape and strengthen shipping, what they were about was eliminating Australian jobs. That wasn’t a matter of rhetoric or argument from the Australian Labor Party. You just had to look at the regulatory impact statement. The regulatory impact statement attached to that legislation stated explicitly that the savings were as a result of the replacement of Australian seafarers and wages with foreign seafarers being paid foreign wages. Ninety-three per cent of the savings that were identified were as a result of that.
No other major advanced nation has attempted to engage in such unilateral economic disarmament, which is what it was. For this reason, the Senate rejected the coalition’s legislation after the evidence of people like Mr Bill Milby of North Star Cruises, who gave evidence that he had actually had consultations with officials from the department of infrastructure at forums where this policy was launched. Of course, it was launched at the body run by the foreign shippers. That was where the policy was launched. When Mr Milby asked for advice on what to do, he was advised to replace the Australian flag, to register as a foreign flagged vessel and to replace his Australian workforce with foreign workers—quite extraordinary. That was the evidence given by Mr Milby before the Senate committee in this parliament—an extraordinary proposition.
What we’ve seen since then is, quite frankly, an abuse, including by the department, with regard to the way that the legislation has been implemented. The legislation, as it currently exists, provides for temporary licences. We did that to allow flexibility. What has occurred is abuse. Perhaps the most obscene example of that is the MV Portland. The Portlandtakes the raw materials for aluminium from Western Australia over to the smelter in Portland on the coast of Victoria and then goes back again. There is nothing temporary about the Portland. Yet, in the middle of the night, seafarers were thrown off that vessel. People on that side talk about thuggery. People were thrown off their workplace in the middle of the night to be replaced by foreign workers. I don’t understand how the National Party, a party that says it’s about the Australian national interest, can support that, but it has supported it over and over again. On this government’s watch, the Pacific Triangle, the CSL Pacific, the Lindesay Clark, the Tandara Spirit, the British Loyalty, the Hugli Spirit, the Alexander Spirit, the MV Portland, the CSL Melbourne, the British Fidelity, the CSL Brisbane and the CSL Thevenard have all gone, replacing the Australian flag with the white flag when it comes to the protection of Australian jobs and the Australian national interest.
This bill will only accelerate the industry’s decline, eventually consigning Australia’s status as a proud maritime nation to the history pages. That would be an unbelievable development for an island continent like Australia. It’s no wonder that, the last time this legislation was before the other chamber, it didn’t even get a second reading. People like former Senator Nick Xenophon and others, who always vote for a second reading in the other place because they argue that that’s just allowing further debate, saw this legislation as being so reactionary, so against the Australian national interest, that it didn’t even get to that stage. Let me tell you: this legislation will not go anywhere either. It is sunk before it has even been through this chamber, and that is a result of the implications which are in it. That’s why there’s no support.
In spite of the fact, as we’ve run through minister after minister—and there have been four infrastructure ministers in the recent period that I’ve shadowed; it’s a revolving door—I’ve said that I’m prepared and Labor is prepared to have constructive dialogue, but they are not interested. This legislation was introduced not by this minister or the minister before, but, I think, the one before that. Minister Chester, I think, introduced this legislation. It has not received any support. The Australian shipping industry itself opposes this. The workforce opposes this. People who actually understand this industry are all opposed to this legislation because it would undermine the integrity of the entire coastal trading regime. So we will be moving a second reading amendment, and then we will have further amendments in consideration in detail.
Let’s look at the two sets of amendments in this bill which are particularly problematic. The first amendments relate to the tolerance provisions. The proposed changes to the tolerance provisions would further deregulate what is already one of the world’s most liberal coastal trading regimes. The proposed amendments would make it almost impossible for a general licence holder—namely, an Australian-flagged vessel—to contest work, because their owner-operator would never know the actual volume to be loaded or the precise loading date. So they’re being asked to basically go for a contract for work without knowing when it’ll happen and what the task is. No wonder the domestic industry opposes it. In its submission to the discussion paper, the Australian Institute of Marine and Power Engineers said:
The ultimate voyage carried out may bear no resemblance to the original voyage for which the Temporary Licence was granted. AIMPE opposes this proposal.
According to the peak industry body, Maritime Industry Australia Ltd:
Without the tolerances being meaningful (and remembering that these were expanded by the 2012 reforms from 10% and 3 days to 20% and 5 days) the system may as well be deregulated entirely.
The Maritime Union of Australia says:
Such open-ended tolerance provisions would totally undermine accepted commercial arrangements and make it impossible for a GL holder to contest a cargo, as the GL holder would not know what they are contesting. The ability to position a ship when the loading date could vary by up to 30 days would be commercially untenable for a GL holder, as would be the unknown nature of the cargo volume.
Operators of vessels involved in the coastal trade have also expressed their concern about changes to the tolerance limits, including CSL, which currently owns three Australian-flagged vessels operating around the coastline. According to another, ANL:
… the current date tolerance seems reasonable …
There’s no justification for putting this forward. There is a flexible regime now, but it works. By way of comparison—and I note the member for Dawson is here; he’s a bit of a fan of President Trump—in the United States, there is no possibility of any ship other than one with an American flag on the back of it taking goods from San Francisco to Los Angeles—none! They have a completely closed system, and that’s a bipartisan position supported by both the Democrats and the Republicans in the United States, because they understand that it arose out of the need to defend their nation. As a result of that and the emphasis they have on defence, they understood the importance of having a national maritime industry. Yet, here in Australia, which has one of the most liberal regimes in the world, this mob want to make it impossible to have an Australian-flagged vessel with Australian workers on it. Just think of the implications for national security.
The second proposal in this legislation is to so-called streamline the temporary licence variation process. I’ve already spoken about the abuse of the temporary licence process when it comes to vessels like those that replace the MV Portland. Currently there are two types of licence variations to an existing temporary licence. Firstly, there are authorised matters, namely a change to a loading date or volume on an existing planned voyage. Secondly, there are new matters, which authorise an entirely new voyage on an existing temporary licence. In the name of streamlining the bill proposes replacing the two types of licence variations with a single provision. However, reclassifying the addition of a new voyage to an existing temporary licence from a new matter to an authorised matter would halve the time available to a general licence holder—Australian ships—to apply for that new voyage from the current two days to just 24 hours, cutting it in half. In practice that would make it more difficult for the Australian industry to compete. Those opposite say they stand for Australian industry. According to Maritime Industry Australia Ltd—this is the peak Australian industry, not the Maritime Union of Australia; this is the industry, the employers and the bosses—any new voyage should be subject to the existing time frames for GL holders to respond or else the integrity of the system is undermined as GL holders’ rights and opportunities are reduced.
In his second reading speech the former minister—Darren Chester, the one three ministers back, who introduced this legislation—assured the parliament that the bill makes amendments to the existing regulatory regime, rather than fundamentally restructuring it. However, in light of the two amendments I have just highlighted, this statement is not the case. This is what Maritime Industry Australia Ltd said on 13 September last year. They warned this:
… there is nothing in the Bill to assist Australian shipowners compete with foreign ships that have all but unfettered access to coastal trades. We held low expectations on that front and unfortunately haven’t been disappointed there.
To be sure, the regulation impact statement is explicit about the bill’s goal of increasing the presence of foreign vessels around the Australian coastline. This what is it says:
… the current framework makes it unattractive for foreign ships to enter the coastal trading sector … These amendments … will remove the barriers that currently face many foreign flagged vessels under the current system.
There you have it. They are saying explicitly what this legislation is about: favouring foreign-flag vessels rather than Australian vessels, all because of their ideology.
The destructive potential of this bill isn’t limited to what remains of the Australian-flag merchant fleet. Just this week, Coral Expeditions, which is based in Cairns, has written about their opposition to this legislation. This is a cruise company whose vessels are crewed by Australians. They employ 150 seafarers in regional Queensland, North Queensland and Far North Queensland. They’ve been going for 34 years, and they’re planning to invest some $100 million to acquire two new additional builds that will employ another 70 Australian seafarers. These cruises go to the Kimberley, Arnhem Land and Cape York regions. However, if the bill now before the House were to become law, it would not only jeopardise Coral Expeditions’ expansion plans and the jobs they would create but it would threaten the very survival of the industry. This is what the company says: ‘It will have the unintended consequence of killing off the growing and globally respected Australian-flag expedition cruise ship industry.’ So says the group general manager, Mark Fifield, and the commercial director, Jeff Gillies. The letter concludes with this simple request to the parliament: ‘We urge that the current restrictions on coastal trading for foreign flagged passenger ships be maintained in order to facilitate the steady and sustainable development of coastal tourism and the Australian seafaring industry.’
I spoke before about Mr Bill Milby of True North. He was opposed to the previous legislation. On the current legislation, he says this: ‘The purpose of temporary licences was to allow foreign ships to carry cargo and passengers in the event that cargo and passengers were already waiting in a port to be shipped from one destination to another. This amendment allows foreign ships to apply for and be granted a temporary licence when there is no cargo or passengers thus allowing the foreign ship to wait at any port and choose to bid against any general licence holder at any time.’
So the fact is that this is opposed, and that’s why I move the following amendment:
That all words after “That” be omitted with a view to substituting the following words:
“whilst not declining to give the bill a second reading, the House:
(1) notes that during the current Government’s tenure 12 previously Australian-flagged vessels have been reflagged to foreign States—in each case the Australian flag has been lowered and replaced with the white flag when it comes to Australian jobs;
(2) further notes that:
(a) the consultations associated with preparation of the bill were negligible, the Minister failed to build bipartisan support for the changes he has brought before the Parliament, and the Government is attempting to tilt the ‘playing field’ further in favour of foreign operators to the detriment of Australian-based shipping companies and other domestic modes of transport, including rail; and
(b) the Government’s true intentions are confirmed in the bill’s Regulation Impact Statement, which on page 9 reads ‘… the current framework makes it unattractive for foreign ships to enter the coastal trading sector’ and on page 14 reads ‘These amendments … will remove the barriers that currently face many foreign flagged vessels under the current system’; and
(3) reaffirms that Australia’s vital economic, environment and national security interests are best served when there is a viable, competitive and growing local shipping industry”.
Before concluding, I want to touch briefly on the issue of superyachts. Over the past 12 months, there’s been a concerted lobbying campaign to make it easier for foreign flagged superyachts to charter in Australian waters. They have sought changes to the coastal trading act which in turn would afford them protections from Customs obligations. In this bill, the government is attempting to do this, but the problem is that what it is doing through this legislation is potentially harming existing, more traditional sections of the domestic maritime industry. Indeed, it could open the way for foreign transhipment and bunker barge operators to apply for temporary licences to work around the Australian coast. Currently the companies performing these activities, which usually begin and end in the same port, are Australian based and employ Australian seafarers.
To be clear, Labor is open to reforms that are specifically about that industry and will promote the growth of the industry to the benefit of communities up and down the Australian coastline. But what we’re not about is supporting reforms that have unintended consequences such as those that I have just described. We think a better, more sensible long-term solution would be new standalone legislation covering all tourism operators, both local and foreign. Alternatively, the government should give consideration to amending the Customs Act.
The fact is that this legislation as it stands is flawed. We will fight this legislation in the House. We’ll fight it in the Senate. We’ll continue to argue the case, because this is about a government that’s not prepared to stand up for Australian industry and Australian jobs.
The DEPUTY SPEAKER ( Mr Vasta ): Is the amendment seconded?
Mr Giles: I second the amendment and reserve my right to speak.
The DEPUTY SPEAKER: I thank the honourable member for Scullin. The original question was that this bill be now read a second time. To this the honourable member for Grayndler has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. If it suits the House, I will state the question in the form ‘That the amendment be agreed to’. The question now is that the amendment be agreed to.