Mar 22, 2012

Coastal Trading (Revitalising Australian Shipping) Bill 2012 – Second Reading

Mr ALBANESE (Grayndler—Leader of the House and Minister for Infrastructure and Transport) (09:03):  I move:

That this bill be now read a second time.

It is with great pride that I introduce the Coastal Trading (Revitalising Australian Shipping) Bill 2012.

We are in the middle of a once-in-a-generation resources boom.

Yet only one-half of one per cent of that trade is carried by Australian flagged vessels.

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.

$200 billion worth of cargo is moved annually.

In a country where 99.9 per cent of our trade is moved by ships, there will soon be no fleet to revitalise.

We need to act now or we won’t have an industry left at all.

This is the first of five bills that comprise the government’s Stronger Shipping for a Stronger Economy legislative reforms to revitalise the Australian shipping industry.

This package is an integrated suite of reforms which address fiscal, regulatory and workforce aspects of our nation’s shipping industry.

This is the most far-reaching overhaul of the Australian shipping industry since 1912.

These reforms level the playing field and provide the industry with a stable fiscal and regulatory regime to encourage investment and promote our international competitiveness.

Like many industries, Australian shipping is at a critical juncture in its ability to continue to be viable.

The irony of the industry’s situation is that it is set against the backdrop of major global change, of which Australia is a major beneficiary.

The double-digit growth of China and India, as well as other developing countries, has driven demand for our resources.

The lack of an Australian shipping industry that can compete in the international marketplace is a lost national opportunity.

There are a number of reasons why Australian shipping has been declining; most of them have directly resulted from policy decisions made by the previous government.

Due to being so far behind our international competitors in terms of fiscal incentives, the last decade or more has seen almost no 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 almost 20 years 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.

Without new investment in the fleet, Australian shipping will continue to lag behind world standards.

Falling productivity when compared to other modes has seen shipping’s participation in the domestic freight task continue to decline.

But it is not just the age of the fleet that is holding us back.

Like many industries, the maritime sector is also feeling the pressures of an ageing workforce.

We must attract new recruits; but we also need to have enough ships so that cadets can gain the required sea time to obtain their qualifications.

In the absence of a domestic shipping capacity we will be unable to train our own seafarers and will be reliant on the international market place to provide us with our maritime safety and environmental regulators.

This government believes that there are compelling economic, environmental and national security reasons to support revitalisation of the Australian shipping industry.

This belief is at the heart of the Gillard government’s Stronger Shipping for a Stronger Economy vision.

Let me turn now to the main elements of the Coastal Trading (Revitalisation of Australian Shipping) Bill 2012.

The bill aims 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.

I previously stated that this bill is the most significant overhaul of our coastal trading arrangements since they were introduced early last century.

Back in 1912 when those provisions were debated in the House the role of British-owned shipping companies in the Australian coastal trade was the subject of much discussion.

One hundred years later, the debate has moved on.

We have one of the most liberal coastal trading regimes in the world.

Unlike the United States, Canada or various European Union countries, Australia recognises that there is a legitimate role for foreign flagged vessels in our domestic shipping industry.

Under the provisions of this bill this will not change.

Nothing in this package of bills closes our coast.

However, we are making transparent the decision making processes which determine a foreign vessel’s participation in Australian domestic shipping.

In support of this, a new three-tier licensing system will replace the antiquated system of licenses and permits:

  • General license holders, who will be Australian flagged, will have unrestricted access to the coastal trade. These vessels will also have access to the tax incentives, including the income tax exemption. This will address the cost disadvantages that Australian vessels experience when competing against subsidised foreign vessels.
  • Temporary licence holders, who may be foreign flagged or registered in the Australian International Shipping Register, will have restricted access to the coastal trade. This access will be provided through an open process, which enables general licensed operators and transitional general licence holders to nominate to carry this trade if they are able to meet the criteria. Third party comments will be accepted as part of the decision making process.
  • Emergency licences will provide restricted access to the coastal trade in terms of major emergencies and natural disasters.

In creating a temporary licence we are moving away from the current system where companies apply on a permit by permit basis

However, we have maintained the flexibility provided by the permit system, through the creation of a licence variation process.

Temporary licence holders will be able to vary their licence to increase the number of voyages that will be undertaken or to vary the details of those voyages that have already been authorised.

General licence holders will have the opportunity to nominate for these voyages.

Again, this will be an open and transparent decision making process.

The bill provides for enhanced merits review of decisions, including recourse to the Administrative Appeals Tribunal on a range of matters.

It also provides enhanced penalty provisions that modernise and provide greater scope for action if there are attempts to undermine the objectives of the system.

Transparency is a cornerstone of this new model and the bill provides for strengthened reporting and publishing arrangements, to enable all industry participants to better understand the shipping market and to support more informed decision making.

Commercially sensitive information will not be released.

There has been some debate regarding the industrial arrangements for vessels engaged in the domestic coastal trade.

This government made the decision in 2009 that vessels operating in the coastal trade will be subject to the provisions of the Fair Work Act.

This was implemented through the Fair Work Act Regulations 2010.

It is this government’s policy that this scope of coverage will not change.

These vessels are operating in the domestic economy and these seafarers are entitled to be paid Australian wages.

This bill is the key to the regulatory framework—a framework that supports Australian coastal shipping, while allowing for the participation of foreign vessels.

It is a framework that will enhance our participation in international trade and underpin the Australian industry with generous tax concessions that level the playing field between Australian shipping and its international competitors.

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 retain a skilled seafaring workforce.

There will be no incentive to invest without the right people in the right jobs.

There are challenges of an ageing workforce, costly and complicated training systems and the consequent erosion of skills.

This was strongly identified by the parliamentary inquiry into coastal shipping.

The government has already been doing its bit in this area and I believe industry must also ramp up its efforts in resolving the skills lag.

To encourage this on 1 January 2012 I established the Maritime Workforce Development Forum with experienced people from industry, unions and the training sector.

It is chaired by the former Public Service Commissioner, Ms Lynelle Briggs. I have already met with the forum, and it has begun its work.

The forum is addressing areas that are fundamental to building our skills base.

These will include a workforce plan for the medium term to address issues including the ageing workforce and the most immediate skills gaps.

The forum will be in place for no more than five years and I will review its effectiveness within two years.

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.

Negotiations between industry and the unions are progressing.

Before I close, I would like to thank those in the industry who share our vision for a revitalized Australian shipping industry—the ship owners, unions and shippers who have worked constructively with the government since 2007 to develop this package.

This package of legislation is the product of a long and thorough process of consultation and review.

Starting first with a comprehensive review by the House of Representatives committee, which delivered a bipartisan report recommending a policy framework to revitalise the shipping industry.

In 2009, I convened the Shipping Policy Advisory Group comprising shippers, industry and unions to advise me on how best to implement these recommendations.

In 2010, fulfilling our election commitment, a discussion paper was released seeking public comment on the proposed reforms.

In 2011, I established three industry reference groups to work through the detail of the reforms. Again, these groups comprised a cross-section of industry.

We involved representatives from across government, with Treasury chairing the fiscal group.

Exposure drafts of all the bills were released for public comment and a further roundtable was held in February – which I addressed – to enable industry to work through the details with officials.

I thank those officials for their leadership and assistance in shaping the final tax package that is being introduced today.

The commitment and cooperation demonstrated by those who participated in this process is a credit to the industry and I thank them for their efforts. I commend this bill to the House.

Debate adjourned.