Oct 14, 2015

Shipping Legislation Amendment Bill 2015 – Consideration in Detail

Mr ALBANESE (Grayndler) (16:46): First, I want to quote from the government official modelling, the cost-benefit analysis, in the explanatory memorandum at page 156. This applies to the preferred option 6. It says:

Many of the operators currently operating under the Australian General Register would likely re-flag their vessels in order to compete with the foreign operators who enjoy the benefit of comparatively lower wage rates. Australian seafarer jobs would be adversely affected as Australian operators re-flag from the Australian General Register.Ship operators are likely to replace Australian seafarers (paid under EA rates) with foreign seafarers (paid under ITF rates).

I say to the Deputy Prime Minister that there was some considerable debate, including in the Senate legislation committee, about the implications of this legislation. In another contribution, I will go to the evidence of Mr Bill Milby and others, which was presented to that committee. Here we have evidence—not from someone else but from the government’s own cost-benefit analysis in the explanatory memorandum—making it clear, and I quote again for the benefit of the minister, that operators:

… would likely re-flag their vessels in order to compete with the foreign operators who enjoy the benefit of comparatively lower wage rates.

I say to the minister that there in black and white are the implications of this legislation before this parliament for Australian jobs. It is beyond comprehension that a minister would bring this legislation to this House when it is so clear what the implications are. So I ask the minister: does he agree with this official government analysis in the explanatory memorandum, which says that if this legislation is carried:

Ship operators are likely to replace Australian seafarers (paid under EA rates) with foreign seafarers (paid under ITF rates).

Mr ALBANESE (Grayndler) (16:52): I am somewhat disappointed that the minister chose not to respond to the very specific quote that I used from his own legislation and that he is asking us to vote for. I also refer to the legislation at page 75 and 76 of the explanatory memorandum in the RIS. The government evaluates the savings there of its preferred option. At the bottom of page 75 and the top of page 76, the combined savings are evaluated. What it shows is that some $19 million in the preferred RIS—88 per cent of the savings—are from ‘labour cost savings’ and $2.4 million—the other 12 per cent—are so-called ‘deregulatory savings’. The minister has made a fair bit of so-called red tape issues. What his own legislation shows and what the RIS of the preferred option shows is that 88 per cent of the savings that the government says will come from this legislation are a direct result of the difference between Australian wages and foreign wages. That is what it shows: almost nine in every $10. That includes, of course, taking away workers from their current coverage under the Fair Work Act.

We on this side of the House have used the analogy of the difference between the ‘blue highway’ and the Hume Highway. If freight is taken from Sydney to Melbourne down the Hume Highway, Australian wage rates apply. The Australian truck industry safety standards of the government apply. But, if it is taken on the ‘blue highway’—again, a domestic freight task from Sydney to Melbourne—then foreign wage rates will apply. I wonder where the minister draws a distinction between the ‘blue highway’ and the Hume Highway. If he accepts the logic that lower wages are lower cost and, therefore, should be allowed to be paid then why is it that we do not allow for Filipino or other truck drivers from Third World nations—the sort of people who are brought in on flags of convenience to work on ships that are registered in flags of convenience—to drive trucks down the Hume Highway and be paid foreign wage rates? The implication for Linfox, for Toll and for other Australian truck operators is that they would go out of business.

The implication for the Australian shipping industry if they have to compete with foreign wages being paid on the domestic freight task is that they will not be able to compete. I go back to my previous contribution. That is why the legislation says very clearly that when you take these two things together ship operators are likely to replace Australian seafarers with foreign seafarers. That is the logic of this government’s own legislation. That is the very purpose of this legislation. I would ask the minister to respond very specifically to the savings that are there at page 75 and page 76 of the legislation, which is the explanatory memorandum.

Mr ALBANESE (Grayndler) (17:00): I note that, in his response, the minister, when he did go to the specific question that I raised, said that the current legislation was not working for roads. He went on to not address at all, in my view, the absolute parallels that are there between the domestic freight task on sea, on rail and on road, and how, if you allow foreign wages to be paid by foreign companies competing against Australian wages and Australian companies, you destroy the level playing field. It is not rocket science here. It is demonstrated by the government’s own legislation, indeed.

I hope the minister appreciates the fact that I am being very specific about what I am asking here in referring to the legislation, as is appropriate for the way that consideration in detail should be conducted. I refer the minister to page 152, to the cost-benefit analysis, which is the minister’s own official modelling, and to table 5.15. It says that the preferred option, which is option 6, will have the following effect on the Bass Strait non-bulk trade. For the Tasmanians who might be present or listening to this, they might want to think before they vote on this legislation both here and, importantly, in the Senate. The official government modelling now uses a base case expectation of 100 per cent Australian crew. The preferred option, and the basis of the bill, shows 35 per cent Australian crew and 65 per cent mixed crew—that is, a 35 per cent reduction from the circumstance of there being 100 per cent. Given that it is the official modelling, has the government estimated how many actual seafarer jobs in the Bass Strait trade will be lost under the legislation?

The evidence before the Senate inquiry was that there were almost 400 seafarer jobs in the Bass Strait trade now and that most would be lost under the government’s modelling. I want to ask whether the minister agrees with the modelling in the legislation that assumes the following with respect to the preferred option as it applies to the existing vessels in the Bass Strait non-bulk trade. The top of page 152 says this:

… we assume 4 vessels will register under a foreign register to reduce operating costs.

So it is very clear what they are suggesting in this legislation. Minister, which vessels does your official modelling assume will reflag from Australian flagged ships to foreign flagged ships? It is there in the assumptions in this legislation. Does the minister agree that the motivation for reflagging is the difference between Australian based wages and foreign wages? I might allow the minister to respond.

Mr ALBANESE (Grayndler) (17:05): To assist the minister, my understanding is that the assumptions assume that two SeaRoad vessels and two Toll ships will reflag. Indeed, the evidence from SeaRoad before the legislation committee was that, as a result of the former government’s legislation, they were about to invest in further investment in ships, which would have, of course, created jobs in Tasmania.

While we are on job losses—which is the key element here—at page 150 of the part of the cost benefit analysis the modelling in table 5.14 says that the preferred option, option 6, will have the following effect in cruise shipping. The base case now is 40 per cent Australian crewed—that is, 40 per cent of the cruise ships that operate around the Australian coast employ Australians. For option 6, the preferred option and the basis of the bill, the expectation is for zero Australian crew—zero. That is what is there in the legislation.

I refer it back to the minister, because it is quite an extraordinary statement to have in the legislation, particularly in the context of the evidence before the Senate inquiry from Mr Bill Millby of North Star Cruises, which I might take up as the next issue with the minister. But, firstly, I would ask him to respond to table 5.14 and I ask: how can the minister possibly defend bringing in legislation before this chamber that makes such recommendations.

Mr ALBANESE (Grayndler) (17:09): To respond to the minister’s last point: that is the consequence of removing any distinction in real terms between Australian flagged ships and foreign flagged ships in their ability to operate and to be present around the Australian coast. To argue that that is a plus is quite disingenuous. I met with the minister and indicated that, if the minister had practical suggestions to support Australian industry and Australian jobs, the opposition would certainly be willing to consider them.

When it comes to cruise shipping, we have the difference between 40 per cent Australian crews—because the large cruise vessels are exempt and are not part of the regime that applies for other vessels—and an expectation in the government’s own modelling of zero per cent Australian crews. That fact indicates that it is the full expectation of the government that the cruise shipping industry with an Australian flag on the back will simply disappear.

That was the evidence given by North Star Cruises, particularly Mr Bill Millby. His submission was very clear. Does the minister accept Mr Millby’s statement to the inquiry on 20 May 2015 that the following happened? I will read from Mr Millby submission.

The Executive Director’s advice to me during that discussion was that if NSCA wanted to remain competitive with the foreign owned and crewed ships it should—quote “consider taking out a ship ‘True North’ off the Australian Shipping Register, re register the ship in a suitable foreign country, lay off our Australian crew and hire a cheaper foreign crew”. When she suggested this I told her that I could not believe the suggestion she made and she said quote “to remain competitive in the world that is what we should do”. At that point I asked for and was granted a meeting with her in her Canberra office to further discuss the issue—prior to the Legislation Amendment Bill being tabled.

Then on 16 June 2015 Mr Millby be met with Judith Zielke and Michael Sutton and the account of that meeting is this:

I asked how they expected Australian expedition ship owners such as NSCA to compete with the foreign crewed ships and remain in business and they suggested the following:-

1. First, take “True North: of the Australian shipping registry

2. Registered “True North” in a foreign country, and Re-flag our ship “True North” with a foreign flag.

3. Then replace the Australian crew (apart from the captain and the chief engineer) with foreign crew who would not be governed under the Australian labour laws and the Australian “Fair work Act”

4. The foreign crew would also be trained in a foreign country—

not Australia, saving more money.

This follows the statement from Tony Briggs, who was the head of the Cairns based Coral Princess group. He said he was selling out to foreign interests in anticipation of this legislation. Mr Briggs said:

There will never be another passenger ship built in Australia if there is no certainty on how we can operate. It is exporting jobs.

He did that with his business.

It is extraordinary that this evidence is not from the Labor Party or the MUA. This is evidence from businesses—the people who actually operate the cruise ship industry—the people who create jobs particularly in north-west Australia and in Far North Queensland. They are simply saying that this legislation anticipates that this would occur. It is not surprising that the bureaucrats told Mr Millby exactly what was in the legislation and that he had a choice of going out of business or reflagging his ship. Mr Millby was the subject of considerable criticism from yourself, Deputy Prime Minister, and the then Prime Minister in a totally inappropriate way. So I ask the Deputy Prime Minister: why is it that the operators, including Mr Milby, have got it wrong? It is very clear from the legislation, from the evidence that was given before the committee and from the FOI material that was tabled in the Senate from Ms Zielke and Mr Sutton, who confirmed that was an option that was put forward to Mr Milby. Of course, he did have another option: to just go out of business. That was the other option that was presented. What other option does Mr Milby have in order to compete with foreign flagged ships, with foreign crews, paying foreign wages in the competitive environment that is the cruise ship industry in the Kimberley?

Mr ALBANESE (Grayndler) (17:20): I think the Deputy Prime Minister knows very well the distinction that he is drawing. The letter from Mr Mike Mrdak, the secretary of the department that was subject to the FOI application—which was only granted, it must be said, after a Senate direction was carried by a majority of the Senate—has in it very carefully chosen words. It says:

Commercial advice was not provided.

It says that and I accept that. It is not up to a department to give advice as to the running of a company. What it does confirm, however, are the various options available under the new framework and the option that was available and that was presented very clearly to Mr Milby. I do not know if the Deputy Prime Minister watched Mr Milby give evidence before the Senate. This was not a seasoned political operator; this was a businessman from Western Australia who went out of his way to attend the launch of the policy by the Deputy Prime Minister. He approached the Deputy Prime Minister for advice and was referred by the Deputy Prime Minster himself to Ms Zielke, who was at the launch at the curiously named Shipping Australia

In great Orwellian tradition, Shipping Australia represents the non-Australian shipping industry. This indicates that Australians want a shipping industry—that is why Shipping Australia call themselves Shipping Australia rather than ‘Foreign Shippers’.

There is an important role for foreign shipping in this country—we do not argue that. The essential argument here is very clear, and the flaw in this legislation is very clear—the minister exposed it with his last contribution when he said ‘we want fair opportunities for Australian business.’ But this legislation does not present fair opportunities. It will have businesses operating side-by-side, working the same routes, whether it be in the freight industry around our coast or in the cruise ship industry, one of them paying Australian wages and their competitor paying cheaper foreign wages. In an industry where the margins are not substantial, that means that the Australian ship, to be able to compete, will have to remove the Australian flag and replace it with a foreign flag and replace their Australian workforce—with a couple of exceptions, I accept—with a foreign workforce being paid foreign wages. That is the purpose of the legislation. That is what the modelling says in this legislation.

It did not take Mr Milby to expose this—it is there in the legislation. Mr Milby’s evidence made it, if you like, a much more retail discussion—it put a face to the consequences. I congratulate Mr Milby on his courage in standing up for Australian jobs. One of the things Mr Milby said in his evidence was yes you can do that, but he wants Australians to show visitors, whether they be from other parts of Australia or overseas, the great wonders of the Kimberley and the Australian coast—our pristine natural environment. That is why this is important. (Extension of time granted) Page 75 of the RIS of the preferred option says under the heading ‘Costs’:

The modelling undertaken for the cost-benefit analysis did not include the cost of the potential loss of Australian seafarer jobs.

It is extraordinary, Minister, that you have legislation before this parliament that says that 88 per cent of the savings will be due to labour cost savings, that says clearly what the job losses are estimated to be by sector and region, but which has no analysis of the economic consequences of those Australian job losses. I would have thought it was appropriate to have modelling of the following, at least: firstly, what are the consequences of the fact that you have less money in the economy as a result of Australian seafarers who live and work and have families and spend their income here in Australia being replaced by foreign crews who do not live and spend money here and create jobs in the local supermarket and local retail outlets, or buy services here in Australia; secondly, what are the consequences, therefore, of less GST being paid because of the fact that you are removing the income of those Australian workers; thirdly, what is the cost of less income tax being paid; and, fourthly, what is the cost of higher welfare costs? Northern Tasmania, in particular, has higher unemployment rates than is the average around Australia. The minister has accepted that the evidence in the modelling assumes that two SeaRoad and two Toll ships from Tasmania will re-flag, replacing their Australian workforce, with a couple of exceptions, with foreign workers. That leads to higher unemployment benefits and social security costs. Social costs occur when you have higher unemployment. The other area that does have higher unemployment than other parts of Australia is Northern Australia—Cairns and around the north-west of Australia. What are the social consequences of that loss? It is beyond me why the RIS of the preferred option did not undertake the modelling of the costs of ‘the potential loss of Australian seafarer jobs’. I wonder whether the minister can respond to that.

Mr ALBANESE (Grayndler) (17:34): I refer the Deputy Prime Minister to page 80 of this legislation as part of the RIS. It relates directly to the comments that he has just made, and it says:

Stakeholders called for policy certainty to create greater certainty in business planning and perceived a propensity in Australia to change shipping regulations on a semi-regular basis, which they felt posed a high sovereign risk for coastal shipping operations in Australia.

The thing is that the legislation that this is amending was from 2012. It amended—100 years after the Navigation Act—the most significant reform that was there. The change of government was in 2013. Throughout that period, where it was clear to most observers that there was likely to be a change of government, the now government made it clear that they would not support that legislation and that they would seek to change it. That meant that investment did not occur to the extent that it would have occurred had that not been put forward. You cannot actually make a decision, in the beginning of 2013, to invest in a new ship, have it constructed and have it operating within a few months. And then companies gave evidence before this inquiry. I refer the minister to the evidence of SeaRoad Holdings, who said things very clearly in a submission to the senate committee. SeaRoad’s Michael Easy warned that the legislation before the parliament would imperil the $100 million investment that they had made a decision on to build the first of two new cargo vessels, the first of which they expected to be operating in Bass Strait just next year. So it is pretty clear in terms of those issues.

The minister gave up some of his ideological blinkers when he gave his last contribution. He spoke, again, about the unionists—which is really what is driving this. It seems to me that those opposite have a view that members of the MUA are not worthy of employment and the way that you stop them being employed is to stop there being an Australian shipping industry. That is the logic. The minister spoke about 26 weeks leave in a completely disingenuous way. He knows it is just like a whole range of other fly-in fly-out workers—ships that operate tend to have two sets of crews because when they work they are working on a ship for seven days a week 24 hours a day, literally. So you have one crew on and one crew off. That is the way the industry works. It is just like people who work in offshore oil and gas or people who work away from their home. That is the way the industry works, and the minister is using this in such a disingenuous way, because you have two crews, there are 26 weeks off and they are working 183 days.

Mr Truss: It does not work like that. You know that.

Mr ALBANESE: The minister does not contemplate the reality of this industry. He spoke about the considerable decline. Indeed, since the Howard government there has been a decline. We addressed those issues. The government has given up on the industry. I would ask the minister to respond to the following questions. Why is it that the phase ‘Revitalising Australian Shipping’ has been removed from the title of the act? Why has the government deleted ‘facilitates the long term growth of the Australian shipping industry’ from the act’s objectives? Why is the definition of ‘Australian nationality’ with respect to a ship being deleted from the act? It is being completely deleted as if there were no distinction between the Australian flag and a foreign flag of convenience on the back of a ship. The government seeks, through this legislation, which is really Work Choices on water, to remove the Australian flag from the back of our ships and replace it with the white flag when it comes to Australian jobs.

In the minister’s response to the last question he laid out very clearly that he regards that as acceptable because there will be savings somewhere else. That is his view. But he should be honest and say that the government’s view is to get rid of the Australian shipping industry because it will assist other industries. If that is the view, then at least say it. It is there in the legislation, as I have outlined in great detail and which I intend to continue to do. But the government needs to respond to this: why is it that a National Party minister—indeed, the leader of the National Party, a political party that has a proud reputation for being, as the name would imply, a nationalist party that will stand up for Australian interests—is completely removing Australian nationality with respect to a ship from the legislation. It has always been there in one form or another. Since Federation it has been there. But this government seeks to remove it from the act.

Mr ALBANESE (Grayndler) (17:42): The figures that the Deputy Prime Minister just used are absolute nonsense. To suggest that that decline has occurred between the previous act coming into practice and today is just not true. The minister did not respond. He spoke about page 80. Page 80 makes it very clear. It says:

The primary driver of higher costs was seen to be high Australian wage costs relative to foreign vessel wage costs.

That is just like the 88 per cent save—as shown in the RIS—being about the difference between Australian wages and foreign wages. That is what is actually there at page 80. But I would ask the minister really specifically—and this comes to the crux of the matter, and he must be able to answer—why he has removed any definition of ‘Australian nationality’ from the act.

Mr ALBANESE (Grayndler) (17:44): Quite frankly, the failure of the minister to respond says it all.

Mr ALBANESE (Grayndler) (17:44): The minister just shows ignorance of the legislation with that response. We are not talking about nationality as in citizenship. We are talking about nationality as in where a company is registered, as in whether there should be a distinction between an Australian flag on the back of a ship and a flag of convenience. It is pretty simple. I referred to the act. I asked about the definition of Australian nationality with respect to a ship that has been deleted from the act. The reason it has been deleted is that previously, under the Howard government, under the Menzies government, under the Bruce government and under every government in power prior to this legislation today this parliament has seen fit to draw a distinction between the Australian flag and conditions and a foreign flag and conditions. Why have we done that? It is because governments have understood that it is in our economic, environmental and, importantly, national security interests to have the presence of an Australian flag and to have a merchant fleet.

For goodness sake, have a look at the role the merchant fleet plays in the defence of our nation. That is why we included the Navy as a direct representative in the consultative group that drew up the legislation that I introduced before this House. This is a government that speaks about stopping boats. We did not think that meant stopping having the Australian flag. But that is what it means here. The merchant fleet play a role in that as well. They play a role in safety. They play a role in security. For an island continent, where 99 per cent of our exports travel by sea, the existence of a maritime sector is critical to our national interest. That has to be the starting point for legislation.

That is why this is not just some semantic debate about words. That is why ‘revitalising Australian shipping’ was in the title. That is why the objectives of the act included ‘facilitates long-term growth of the Australian shipping industry’. That has been removed. That is why you have a definition of Australian nationality. I will provide the answer for the minister. You do not need a definition of Australian nationality with respect to a ship if you do not draw any distinction between an Australian flagged ship travelling from Brisbane down to Sydney and a foreign flagged ship, if it is just a free-for-all with no preference, which is what is in this legislation, and where the Australian ship has to compete on the basis of foreign wages being able to be paid. That is the point, Deputy Prime Minister, that I was making. It is not some academic exercise.

I would ask the minister to indicate if any of the following G20 nations open up their coasts to all comers without making a distinction about nationality of ships and flags, as his government proposes to do. The United States does not. Canada does not. Japan does not. The countries in the European Union bloc do not. India does not. Indonesia does not. China does not. That is why I say this is unilateral economic disarmament. None of our competitors do this. The minister, to his credit, understood this in resisting the absurd proposition of Minister Robb to get rid of cabotage when it came to aviation. But he does not seem to understand that it is the same argument here.

The United States, under the Jones Act, not only does not allow goods to be transported around its coast by anything other than a US flagged vessel with US seafarers; the ship has to be built in the United States as well. That is a proposition that has the support of the Democrats and the Republicans. It was supported by Ronald Reagan. It was supported by George Bush Sr and George Bush Jr. It is supported by Barack Obama, President of the United States. A few of the fruitloops in the Tea Party oppose it, but everyone else in mainstream politics in the United States supports it. That is because of the experience of the US in World War II. They understand how important it is for the national interest. That is why, if the Deputy Prime Minister can indicate any nation comparative to ours, any major economy, that says, ‘We will allow a free-for-all and get rid of preference around our coast,’ I would like him to please tell me where it is.

We speak a lot in this place about trade, bilateral agreements and multilateralism. We speak about equality of opportunity and arrangements. There is no equality of opportunity here. It is simply not possible for Australian flagged ships to turn up in the US, Canada, Japan, the EU, India, Indonesia or China—any of the G20 nations where we have significant trading relationships—and just start doing business on their coasts. There is a reason for that. It is extraordinary that this is being given up.

If the Deputy Prime Minister has some knowledge that some of these countries are about to do this, I would like him to tell me. But I draw his attention to the United States, the land of the free market. It has a very protectionist system. We do not have a protectionist system here. We have a system that says, ‘When an Australian ship is available to do a domestic freight task, it should get that work.’ Secondly, it says, ‘If an Australian ship is not available and a foreign ship does it that is a good thing, but it has to pay Australian wages.’ That is what this argument is about, here, and the uncertainty.

The minister said he is serious about Australian jobs. He said he wants jobs created in the Australian shipping industry. What we know from the legislation is that the Australian shipping industry will decline. Eight-eight per cent of the savings are due to the difference in wage costs. We know four ships in Tasmania will remove their Australian flags. That is the expectation. The expectation of the cruise-ship industry is that it will literally disappear, in terms of the Australian flag. It is there in the legislation. This is not something we needed an inquiry on. I ask the minister: what comparative nations—any at all—is this legislation going to be consistent with, or is it the case that it can be seen as unilateral economic disarmament?

I refer to the regulatory impact statement at pages 74 and 75. The following is the preferred option 4, which is in the RIS and is the basis of the bill. It says this about the exclusion of Australian workplace standards for ships in Australia up to six months. It states:

Some foreign ships would continue to be subject to the Fair Work Act under option 4, however the threshold for coverage will be lifted to ships that engage in more than 183 days of coastal trading in a permit year. This policy change acknowledges the concerns of stakeholders that current Fair Work Act coverage is burdensome, while also requiring adherence to Australian wages and conditions for ships engaged in significant Australian coastal trade.

It is extraordinary that because of the nature of these flags of convenience, that tend to be major operations, it could simply replace one ship around the coast with another one at the six-month mark and the clock starts ticking again, enabling it to pay foreign wages. There is nothing in there, beyond that six months continuous work or 183 days in the year. It is an extraordinarily high figure. Even under its own logic, surely the government—if it were fair dinkum at all—would have a figure in there that was not such a free-for-all. That 183 days exposes the weakness in the government’s position.

I do not know if the minister wants to respond to that specific argument. I am more than happy to come back, at a later time, if it suits the minister. I provide him with that offer in good faith. I have been trying to go through, very specifically, problems with this legislation. I might move onto the next one while he is giving consideration to that.

The regulatory impact statement, at page 55, says the following, when evaluating constraints and barriers:

In the current global environment with an oversupply of ships, shippers are unlikely to face difficulty in sourcing transport services; however, in the future an increased exposure to global market forces—

And I ask the minister to respond to this—

could result in a situation where Australian shippers are less able to source cheap and reliable domestic sea freight services. Consultation indicated this is a risk the industry is willing to assume in a globalised economy.

This is a problem for the Australian economy as a whole.

The minister has clearly indicated he is prepared to see the Australian shipping industry decline—or disappear—because he thinks that will produce benefits for other industries. But here we have, in the government’s own regulatory impact statement, a statement from the government that there could be circumstances whereby Australian shippers—people who want to carry freight around the coast—simply are not able to engage in that trade, thereby representing an extraordinary risk to the economy. It is one of the reasons we have an Australian industry, why you need the Australian flag, when you are an island continent. The consequences of that are quite extraordinary.

The RIS, in the legislation here, essentially says, ‘There’s a risk there but industry is prepared to cop that.’ I am sure there would be some people—Shipping Australia is clearly supportive of this legislation—who are prepared to accept that. For those people who the minister says rely upon shipping services it is quite extraordinary. It goes to issues such as energy security as well. What happens if there isn’t a ship available to supply the energy security that Australian industry requires? It seems to me that the reliability risk is a real issue.

I go now to the issue of assumptions on foreign registration. I go to the cost-benefit analysis, which is at page 128. It operates under the following basis for making its assumptions:

An analysis of the ships that operated under a Temporary Licence between July 2012 and June 2014 using Lloyds data indicates that foreign vessels operating in Australian coastal shipping are registered mostly in open registry countries including Panama, Liberia, the Marshall Islands or the Bahamas, or otherwise registered in low-wage countries or countries offering favourable conditions to foreign ship owners …

There it is in black and white on page 128. They are called flag-of-convenience ships because those nations, quite frankly, are prepared to allow the use of their flag on the back of ships that really have nothing to do with those nations. The ships that fly the Liberian flag are not actually ships that arise from the Liberian shipping industry. They are called flag-of-convenience ships because those nations are prepared to allow what I regard as a misuse of their flag—something that the Australian people would never allow any government in this nation to operate. But it makes it very clear in terms of the circumstances of the RIS when it talks of ‘favourable conditions to foreign ship owners’. Exactly what does that mean? What that means is the way that workers are treated. What that means is that less tax is being paid into the Australian economy. And the government makes this assumption in its official modelling that is the basis of this legislation. I hope that those who are sitting in their offices—particularly the National Party members who, historically, have been prepared to stand up for Australia—are listening to this. There, in black and white on page 128, are the assumptions that I regard as quite remarkable.

I refer the minister to page 156 of the explanatory memorandum—the cost-benefit analysis. It says the following of the preferred option:

Many of the operators currently operating under the Australian General Register would likely re-flag their vessels in order to compete with the foreign operators who enjoy the benefit of comparatively lower wage rates. Australian seafarer jobs would be adversely affected as Australian operators re-flag from the Australian General Register.

Ship operators are likely to replace Australian seafarers (paid under EA rates) with foreign seafarers (paid under ITF rates). Nevertheless, a portion of the crew may remain Australian due to the world-wide shortage of high-ranking positions.

Can the minister indicate why his official modelling indicates the loss of Australian seafarers’ jobs and their replacement with a foreign workforce? What is the assumed size of the Australian major trading fleet following the passage of this legislation—that is, what is the end point that the government sees? Is it zero Australian ships?

I also ask the minister this. As part of shipping reform we had a maritime workforce development forum that worked with the Australian Maritime College at Launceston, with industry, with the unions, with the navy—all were represented on that task force. I do not believe that the minister or the government have considered the implications for the crossover in skills that a domestic Australian maritime sector provides: the people who run our ports; the people who run our harbours; the people who go from the navy to the merchant fleet. There is a real crossover and, in getting rid of, essentially, an industry in the way that it is envisaged, I believe that the government has not given appropriate consideration to that.

There is another issue I would like a response to. The minister made an assertion in response to my comparative analysis in my second reading speech about the way in which the Australian shipping industry has a very good record and the foreign flag-of-convenience industry has not such a good record; he sought to suggest that that was not the case. I have witnessed, and I refer the minister to, the Pasha Bulker incident off the Newcastle coast—one that created a great deal of damage and one which the reports showed certainly could have been avoided had the ship’s captain acted in a responsible way. I also refer him to 2009 as cyclone Hamish approached the Queensland coast, when the Pacific Adventurer lost shipping containers overboard that created a huge hole in the hull of the ship and a 60-kilometre oil slick which hit the beaches of the Sunshine Coast—indeed, very close to the minister’s electorate. The clean-up bill there was $34 million and, again, the ship had a foreign flag.

About a year later I was the minister when Shen Neng 1 ran aground off Rockhampton. As you are aware, the Australian Maritime Safety Authority do a fantastic job—that is something we can agree on. I flew over the site in an AMSA Dornier aircraft, and you could literally see the channel where the ship should have gone through off the coast and turned. You could see precisely what happened from the air—the ship just kept going. The consequence of that was a hole in the Great Barrier Reef three kilometres long and 250 metres wide.

Just after that I went to New Zealand and looked, along with the New Zealand minister, at the consequences of the disastrous foreign flagged ship that stopped the trade from the major port on the North Island near Auckland for a period of many weeks. AMSA and Australian experts came and assisted in that process. There is something that all of these incidents have in common—they did not have the Australian flag on the back of the ship; they did not have an Australian captain and seafarers who were actually aware of local conditions; they were circumstances that cost a substantial amount of money. The consequences for our environment of these incidents was to be dire indeed

I repeat my offer to the minister to come back and have further debate—if the minister is going to answer these questions, which are very specific, about his legislation. All of my contributions have gone to the detail of the legislation—detail that has not been considered properly by the government. Paul Neville of the National Party, who was one of the architects of this legislation, would be quite shocked by the way in which this legislation is being dealt with. I have one summing up contribution, but if the minister does want to respond to the questions that have been asked now or at a later time, I would ask him to.

Mr ALBANESE (Grayndler) (18:19): First, in response to the definition of Australian nationality, this is what it actually says on page 8 of the legislation:

Item 5 repeals the definitions of acceptable tolerance limits and Australian nationality in subsection 6(1). The new coastal shipping permit … provides a vessel with unrestricted access to coastal shipping, which means the definition of acceptable tolerance limits is no longer required. The definition of Australian nationality is not required as no provisions in the Act refer to Australian nationality.

It is there. It is a free-for-all. There is no limit. Previously you had to define ‘acceptable tolerance limits’. You had to define the access that foreign ships had on the coast, because they were restricted. Now what it says is that it is a free for all. You get a permit, you can do what you like and you can pay foreign wage rates. That is what it says. The minister says, ‘We want to see more seafarers or more Australian shipping,’ but we have quoted very clearly from his own bill. It says:

Australian seafarer jobs would be adversely affected as Australian operators re-flag from the Australian General Register.

Ship operators are likely to replace Australian seafarers … with foreign seafarers …

So the register changes the flag on the back of the ship and the workers change. That is what the legislation says will be the consequence of it.

So do not come in and say, ‘We don’t want what the act says will happen, but vote for it.’ That is absurd. It defies common sense. That is why we are opposed to this legislation. That is why I have said in good faith—and I do so again publicly to the minister—that, if there are improvements to be made, by all means we are prepared to consider them. We fixed the Qantas act, as Alan Joyce reminded the National Press Club today, by amending the legislation in the Senate, and the government responded practically by agreeing with Labor’s position, and we got it done in the national interest. This minister did the right thing by opposing Andrew Robb’s absurd attack on aviation cabotage, which would have meant the Australian carriers, Qantas and Virgin, departing northern Australia. That is what they said would happen. That is why this minister opposed it. He stood up to his cabinet colleague, and he should stand up for Australian jobs and industry on this, because the Australian shipping sector is saying what will happen, in terms of Maritime Industry Australia Ltd

The sector is saying what will happen. The cruise ship industry is saying what will happen. The legislation itself says what will happen, in the RIS and in the explanatory memorandum. It says that four ships that currently operate from the Tasmanian coast will disappear as Australian flagged ships. It says that, so do not be surprised when it happens. That is why we are opposed to this legislation.

This is Work Choices on water, because it is ideological. According to the legislation, 88 per cent of the savings is the difference between Australian wages and foreign wages. That is what it says in the legislation. We reject it because it is unilateral economic disarmament. I asked the minister very clearly: ‘Which of the G20 nations—the United States, the European Union, Indonesia, China, India, Japan—would allow this sort of policy?’ The answer to that is: none of them, because they all understand their national interests, and so we should. That is why this minister should withdraw this legislation. That is why the Senate should vote this legislation down, and they should start again with proper consultation. The change of leadership in the government should provide Prime Minister Turnbull with an opportunity to have a common-sense solution. When you have a policy that is opposed by the entire sector(Extension of time granted) and there has not been proper consultation, the legislation should be opposed.

I have very specifically gone through the problems in the legislation, in the explanatory memorandum, in the RIS and in the bill itself before the parliament. I have very clearly indicated that there is a problem with regard to the consequences, and not just from the evidence of the Senate legislation committee. The consequences were very clear from evidence from people like Mr Bill Milby. I have gone through what the act itself says. I have been in this place a long time—

Mr Robert: You have!

Mr ALBANESE: and I will be here for a long time yet. I notice that the member for Berowra is up there. He has been here for more than double the time I have been here. When Work Choices was carried, we pointed out that it was ideological legislation and that it would cause great damage to the national economy. This legislation is just ideology before common-sense and that is why it should be opposed.

The DEPUTY SPEAKER ( Mr Goodenough ): The question is that the bill be agreed to.

Mr Albanese: Can I just indicate that the Deputy Prime Minister has indicated that he has a meeting and, out of deference to him, rather than any indication that the opposition is anything other than totally opposed to this legislation, we will not call a division at this time.

Bill agreed to.