Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Environment and Communications References Committee - 21/07/2014 - Great Barrier Reef

MEYJES, Mr Simon, Chief Executive Officer, Australian Reef Pilots

NAIRN, Commodore Rod, Chief Executive Officer, Shipping Australia Limited

CHAIR: I welcome representatives from Shipping Australia and Australian Reef Pilots. I understand that you have been provided with information on parliamentary privilege and the protection of witnesses and evidence. We have received written submissions from you, for which we thank you. I invite either or both of you to make a brief opening statement, and then the committee will ask questions.

Cdre Nairn : Thank you very much to the committee for providing us with the opportunity to address this inquiry. Shipping Australia represents shipowners and agents who manage ship visits in Australia. Our major focus is promoting efficient and effective maritime trade with Australia and advancing the interests of shipowners and shipping agents in good shipping policy development and safe, environmentally sustainable ship operations. Shipping is an international business, and it needs to be internationally consistent. Australia is prominent on the world stage for shipping safety, and I would like to acknowledge the good work done by the Australian Maritime Safety Authority in promoting Australia's policies overseas and through the International Maritime Organisation.

In relation to this inquiry, I acknowledge that the science is fairly clear in identifying the major threats to the Great Barrier Reef as extreme weather conditions, such as cyclones; crown-of-thorns starfish; and coral bleaching. And I note, from the previous presentation, agricultural run-off as a significant component. With this in mind, the negative impacts of shipping seem to be a disproportionate focus, as they are in fact negligible in the reef environment and are far outweighed by the economic benefit to Australia of effective shipping operations, which accounted for $60 billion in trade in Queensland in 2010-11.

I would like to add that with the effect of coral bleaching being linked to global warming and shipping being the most environmentally efficient means of long-haul transport on a tonne-per-kilometre basis—four times less emissions than rail, for example, and 20 times less emissions than road—one would expect that environmentally focused organisations would support the modal shift of long-haul freight to coastal shipping. Shipping is already effectively regulated within the Great Barrier Reef and within the global economy. Examples of this are the North-East Shipping Management Plan, which has been developed in consultation between all industry and government players, including the Great Barrier Reef Marine Park Authority, to deal with future issues of growth.

In Queensland there are significant additional safety features that do not apply globally, such as the introduction of a particularly sensitive sea area, which covers the Torres Strait and the Great Barrier Reef; compulsory pilotage through the Great Barrier Reef and the Torres Strait; the vessel traffic system that has coverage of the area and has now been extended southward to the bottom of the reef; detailed hydrographic surveys that have been conducted over a number of years to improve the safety of the major shipping routes, designating those shipping routes and extending the two-way route to the bottom of the Great Barrier Reef area; and full coverage of electronic navigation charts to allow computer based navigation and the progressive introduction of compulsory use of electronic charts displaying information systems, which will be in place by 2018 globally. These initiatives together address all the factors that have contributed to all the previous shipping incidents in the Great Barrier Reef area.

In conclusion, I would like to say that the existing regulatory environment for shipping in the Great Barrier Reef is both comprehensive and efficient. It focuses on safe, routine access to shipping. It supports the maintenance of Australia's maritime trade, which is crucial to Australia's standard of living, our economy and our ability to continue to preserve the Great Barrier Reef.

Mr Meyjes : Australian Reef Pilots is a privately owned, commercially operated for-profit licensed pilotage provider. This makes us somewhat unique on a global basis. We operate in several compulsory and non-compulsory pilotage areas in Australia and New Zealand. Whilst we have a mandate from our shareholders to deliver a satisfactory return on their investment, we recognise that this can be achieved only by providing the highest-quality service to our clients. No matter what the industry, the notion of profits drives businesses. Safety as well as efficient operations and profitability can and should coexist in every company, even in industries like shipping where schedules are critical and hazards are a daily concern.

For safety and profitability to successfully coexist, it is essential that operators understand that an outstanding safety record is directly linked to the company's bottom line. Safety and corporate citizenship fall into the category of activities that protect our business. The price of not paying attention to safety is risking the corporation's existence. However, a word of caution to the commercial shipping industry: noting the very challenging financial conditions currently facing the shipping industry, it is timely that all operators are reminded of the fact that you only get what you pay for. The enormous pressures to costs will have inevitable negative consequences, particularly with respect to the quality of essential safety services such as pilotage. I urge all shipping operators to work with the pilotage industry to ensure that downward pressure on pricing does not result in significant erosion of standards.

I really came here today to ask some pretty basic questions. The first is: is commercial shipping in the Great Barrier Reef safe? In the last 11 years, the success rate for the Great Barrier Reef pilotage has been 99.9995 per cent with only two major groundings, with minimal marine pollutant discharges resulting. However, we posit that only limited safety information can be derived from such meagre statistical data. What are the risks of major shipping accidents in the Great Barrier Reef?

Recent examples of catastrophic shipping accidents elsewhere remind us of our vulnerabilities. To quote just a few: the 1987 sinking of the Dona Paz in the Philippines led to 4,341 deaths, with only 24 survivors, the worst peacetime maritime disaster in history and it was relatively recent. Far more recent than that we had the grounding and total loss of the Rena on Astrolabe Reef in New Zealand, the grounding and total loss of the Costa Concordia area in Italy in 2012, the structural failure and total loss of the MOL Comfort in the Indian Ocean in 2013 and more recently, in 2014, the capsize and total loss of the Korean ferry Sewol with the loss of 476 people. All of these accidents occurred as a result of some form of human error, as did, I might say, the grounding of the coal bulk carrier Shen Neng 1 on Douglas Shoal within the Great Barrier Reef. If I could refer to the loss of the Costa Concordia

CHAIR: I need to interrupt you there. We have very limited time and we have your written introductory statement. Perhaps you could highlight a couple of points from the statement and we will then need to move to questions.

Mr Meyjes : Referring to the Costa Concordia, this is regarded as a one in 100 year accident. In due diligence terms, all of the good work that we see happening in Australia to protect shipping would not have presented a Costa Concordia disaster. This is the major point in my submission. Because shipping in Australia appears safe because we do not see high accident rates, that does not that a bad accident is not perhaps around the corner. We believe a lot more can be done and should be done in practical terms to ensure the safety of shipping. That really means addressing what happens on the bridge of ships, rather than what we are doing more or less ashore with vessel traffic systems, with regulation, with port state control inspections, because nearly every one of these major accidents is a result of something happening on the bridge of a ship which should not have happened.

CHAIR: Thank you very much. Mr Meyjes. The committee has heard evidence from other witnesses about developments in the industries of reef stakeholders. We have heard about the resource sector, we have heard about ports development et cetera and there has been some commentary in the context of this inquiry about a massive increase in shipping in and around the reef with different sizes of ships carrying different cargoes. Can you give us a snapshot of where you think the shipping industry is going in the context of the reef?

Cdre Nairn : I have listened to the various commentaries and I have to say that I can give you some indications of what the trends might be, but for figures I would probably refer to the BITRE figures and their estimates because they are as good as anyone else's. The increase in bulk shipping has traditionally been around three to five per cent and I expect it will continue to grow at about the three to five per cent level.

CHAIR: Per annum?

Cdre Nairn : Per annum. In container trade, which is not so prominent in the coastal part of Queensland, although we do have some container ships to go through, the general growth has been around eight per cent but it seems to have dropped back now to the four to five per cent level.

A lot of the reason for that is that, over the last 30 years, there has been a gradual shift from break bulk cargo into container cargo. So there is more containerised cargo and that has increased the level of growth. That could also occur in some Queensland ports—probably the more minor ports—because some traditional bulk commodities are now being shifted by container. I do not have any great reason to vary from the figures that have been bandied around and I would particularly refer to the government statistics as my guide.

Something that may have an influence is the size of the shipping. We are limited with ships that transit through the Barrier Reef and the Torres Strait to a currently 12.2 metre draught. That is unlikely to change by any significant amount, even though the dynamic under keel clearance management system that has been put through the Torres Strait has increased the safety levels and margins and may allow deeper draught shipping to come through slightly deeper in the future, which will be of economic benefit and should maintain the safety margins.

The rest of the shipping coming in is really restricted only by the depth alongside in the ports. The cape class ships, which generally do most of the bulk cargo trade through Queensland or in the vicinity of 18 to 20 metre draught, and I do not see that increasing substantially through the area. Even in the southern park of the reef around Gladstone, you start to be marginal if you go too much deeper than that.

CHAIR: Has Shipping Australia been involved in the Reef 2050 development?

Cdre Nairn : We are not represented on that at the moment, but we have had discussions with the Queensland government and we do discuss with Ports Australia on some issues. We are really a user of the offshore highways, the coastal highways and the ports; we are not a provider of them.

CHAIR: Mr Meyjes, what about your organisation? Have you been involved in Reef 2050 at all?

Mr Meyjes : No.

CHAIR: Do you think you should be, given what you have just said about the potential for significant maritime incidents?

Mr Meyjes : We certainly like to keep a watching brief on all of these organisations that are monitoring safety.

Senator McGRATH: In terms of shipping safety management, how does the management of Australian shipping in Australian waters, especially around the reef, compare internationally?

Cdre Nairn : The Great Barrier Reef area is probably one of the most regulated shipping areas in the world from a safety perspective. The area is designated as a particular sensitive sea area, which gives the port state much more control over where ships can go et cetera. The two-way route will limit that even further, at least to provide a safety area for guidance.

The Torres Strait, which is not exactly in the reef but leads into the reef, is one of the only—maybe the only—international strait that has been designed as a compulsory pilotage area. That created some adverse comment from other parts of the world when it was introduced but has since, over the last few years, gained recognition because of its sensitivity and the pristine conditions up there. Most international shipping organisations and states now generally accept that. It was a very difficult thing to get through. The extension of the particular sea area to the bottom of the reef again does in some way restrict shipping and what it can do. But I think the prominence of Australia on the world scale has helped to make that acceptable internationally.

Mr Meyjes : Whilst I agree largely with what Rod has said, I think it would be dangerous for us to be lulled into a false sense of security that all of the additional measures we are put in place here in Australia sets us so far apart from the rest of the world. For example, the REEFVTS failed to intervene in the grounding of the Bunga Teratai Satu on Sudbury Reef—

not through any lack of will in the system and not through any lack of resources, but there was simply a navigational stuff-up and the VTS operators could not intervene within a timely fashion. That is one example.

Ships that do not have a coastal pilot or a port pilot on board are navigated through dangerous waters with crews of unknown training often from ships registered in foreign flags of convenience, where safety standards are not shared with Australia. That is a major concern. We are not at all confident in the training standards delivered by a lot of other countries which provide 'economical' crews, for want of a better word. We are aware of the ready availability of forged qualifications in some countries. All of these factors really do not make our waterways substantively a lot safer than many other parts of the world unless you actually have a coastal pilot or a port pilot on board to intervene.

Cdre Nairn : Just to finish that point. The regulatory response to the Bunga Teratai Satu grounding on Sudbury Cay was to extend the compulsory pilotage area down a little further south past the critical change. So there was a regulatory response, which has reduced the risk and has supported what Simon said: increasing the distance on the compulsory pilotage area.

Senator RUSTON: This morning one of the witnesses made a comment that by using a method of trestling you could reduce the level of dredging that was required to enable ships to get closer to land. From a ship operation's perspective, is that a sensible or reasonable option to solve that problem?

Mr Meyjes : It quite possibly would be from a management of dredge spoil point of view, but from a management of port safety point of view you are introducing another range of risks because the further out to sea you are, the worse the weather conditions are likely to be. That then introduces risks to tug operations and pilot launch operations, and the risk of being able to unbirth a ship in unfavourable weather in an emergency et cetera.

Senator RUSTON: So it is not just an issue of dollars; it is an issue of safety and risk et cetera?

Mr Meyjes : It is a far more complex problem, yes.

CHAIR: Commodore Nairn referred to having Australian pilots on ships and that the zone where an Australian trained pilot is required to be on a ship has expanded. What was the reason for that increase in the zone?

Mr Meyjes : When the Torres Strait was included in the PSSA, that allowed Australia to apply to the IMO to have the compulsory pilotage area extended north into the Torres Strait and to give coverage to that international strait, which previously, under unclothed ships, had a right of free passage.

CHAIR: That has been extended southwards?

Cdre Nairn : It has also been extended a bit further south.

CHAIR: What was the impetus for that?

Cdre Nairn : The impetus was the grounding of the Bunga Teratai Satu. Basically, the pilot got off at the end of the compulsory pilotage area and then the watch-keeper ran into the next reef. He forgot the course alteration! I think he was on the phone on the bridge.

Mr Meyjes : He was on the phone to his wife.

Cdre Nairn : 'I got rid of that bloody pilot, good. I don't need him.' Sorry. It was one of those accidents that you just never think will happen—broad daylight and it ran onto a reef. As Simon said, this can happen but, from our point of view, there are regulatory conditions in place that are as good as you can get to reduce the risk of those accidents. If we look at the history of accidents in the Great Barrier Reef, we have not had an oil spill in the area since 1970. That was the Oceanic Grandeur in Torres Strait. We have had about half a dozen other groundings in the meantime. In each case, the improvements that have been made in the automated computer based navigation systems with built-in warning will have overcome or at least reduce the risk of those occurring again due to the extra technologies that are available. It does require the people to be adequately trained and to use them properly, but it gives them more help than they have had. From every incident that I am aware of that has occurred inside the Barrier Reef there has been some sort of technology improvement or regulatory improvement that has at least reduced that risk and treated that risk to some level.

Mr Meyjes : I think that is a pretty fair assessment. The fundamental principle of being a marine pilot is always to expect the unexpected. Barely a week goes by when I do not get an incident report from a ship under pilotage where something on the ship has gone wrong. It ranges from something fairly minor like a gyrocompass failure, which is not the end of the world for a skilled navigator, to a comprehensive power blackout on the ship resulting in complete steering failure in an extremely compromising part of the reef and a whole range of other issues in between. Those types of unexpected occurrences are things that are very difficult to plan for. We do try. They are things that all of the prior safety improvement implementations have not addressed, because these are accidents that are yet to happen. So rather than dwelling too much and looking at what a good job we have done in fixing what has already gone on in the past we need to take a proactive safety case, whole-of-industry approach and sit down and document all of the likelihoods and possibilities in the future and come up with means of addressing them in the safest possible way.

CHAIR: Could that be by regulatory means?

Mr Meyjes : There is a whole range of means. It has to incorporate all possible reasonable means. That is what Lord Cullen said when he stipulated the requirement for the safety case after the Piper Alpha disaster in the north sea. He said the only legally responsible means of demonstrating due diligence is to build a safety case which addresses the specific risks to your own industry. That is what we as a pilot provider do. We believe that AMSA is well down the track on building its own regulatory safety case. The missing link in this is the individual shipowner flying a foreign flag of convenience, who may not share our collective enthusiasm.

Senator WATERS: In the view of each of you, are the mandatory pilotage areas in the reef big enough?

Mr Meyjes : Under the North-East Shipping Management Plan, there are now proposals to extend the compulsory area south in a multistage process. First to introduce a voluntary pilotage scheme further south of the current limit and then, depending on the growth of shipping volume, to make that mandatory in the future. The talk is that by 2020 that may be a possibility.

Senator WATERS: Do you think they should be mandatory?

Mr Meyjes : We have not formed a view on the complete proposal, because we have not seen it. It is a fairly high-level statement at the moment. Our view—I am pretty sure that Shipping Australia would agree with us, but please comment, Rod—is that there is an argument for each ship to be treated on a case-by-case basis. Each ship has its own risk profile. It is not very difficult to deduce what that risk profile is prior to the ship's arrival in Australia. A high-risk ship may be a ship that flies a particular flag of convenience that has a poor safety record, that is crewed by people with known dodgy qualifications. You can quite quickly build a picture of where the high-risk operators are. They are the ones where perhaps you might insist on pilotage versus ships that are regularly trading in the area that have known competent crews employed by companies with known commitments to safety.

Cdre Nairn : I pretty much agree with what Simon said. The North-East Ship Management Plan is an ongoing work in progress and probably always will be as it matures. The risk assessment is important. We do not want to overregulate and basically force everybody into the same assessment, so the individual assessment of safety record is important from that factor.

Senator WATERS: Does that north-eastern shipping management plan that is in draft form include ship speed limits?

Mr Meyjes : No.

Senator WATERS: I am interested in the link between ship speed and wildlife fatality if there is a ship strike. Can you share from your experience whether or not you have noticed an increase in ship strikes given the increase in fossil fuel ship vessels in recent times—and projected to continue to increase? Is that something either of you have detected.

Cdre Nairn : I have not been involved in a ship strike but I have spent 20 years at sea and 15 years of it inside the Great Barrier Reef. Generally, the speeds of my ships were 15 knots and less. That is all I can say.

Mr Meyjes : As recently as this morning I had a discussion with one of our senior pilots on the subject. He has spent nearly his whole life on the reef and has not personally experienced a ship strike with a whale or a dugong but he has seen carcases at sea. We would all have to assume that these things happen. Whether they are actually related to the speed of the ship, the position of the ship or the particular frame of mind of the animal, we have absolutely no way of knowing as pilots.

Senator WATERS: Correct me if I am wrong, but my understanding is that one of the conditions of the particular sensitive sea area declaration is that there is an obligation to reduce underwater noise. Can you tell me what, if anything, is happing in that space in the reef?

Mr Meyjes : One of the outcomes of the eco-shipping movement—and this is a global movement which addresses x emissions and greenhouse gas emissions—is the development of far more fuel efficient ships which are now more efficient at lower speeds, and there will be a positive outcome in terms of the noise signature of ships. We have see just in the last couple of years bulk carriers have slowed down from an average of about 15 knots to an average of 11 to 12 knots with the parallel fuel savings. From a ship operator's point of view, it is all about fuel. But there must also be other environmental benefits from that.

Senator WATERS: Mr Meyjes, can I ask you to elaborate on a comment that you made in your opening statement where you said that you felt that your organisations was coming under enormous pressure to cut costs? Can you elaborate on that and just outline what effect that could be having on shipping safety for crew and cargo but also for the health of the reef itself?

Mr Meyjes : The global shipping industry is highly cyclical—more extremely cyclical than many other industries—because the sources of investment in the industry tend to be far more speculative than in many other industries. Due to the extreme peaks and troughs of the industry, during hard times, which we are experiencing at the moment, you see high rates of bankruptcy, high rates of arrests of ships and enormous pressure from shipowners all the way down the supply chain to cut costs. We are experiencing that at the moment. Obviously you reach a point in any business where the business's viability to deliver against its core values may become compromised.

Senator WATERS: Is there any way that we as policymakers can protect against that?

Cdre Nairn : There are many other areas of cost in the supply chain for shipping. The ones that can be added to cargo are generally the ones that the shipowner can recover. The ones that are dependent on the ship itself, such as navigation charges, pilotage charges and tug operation charges, are the ones they have more difficulty recovering. So that is where they will have their tightest areas.

We are talking about a competitive environment, and I guess that is what Simon is referring to. He is in a competitive environment. Where shipowners really suffer is when they operate with monopolies, which is often the port authorities, the ports or the towage operators in remote ports where there are more monopolistic operations. The concern that we have is to make sure that the competition is fair in these areas and that they are perhaps providing the same level of service and safety.

Senator WATERS: Indeed. Thank you.

Senator BULLOCK: Gentlemen, I was going to congratulate you on your extraordinary safety record, but after hearing Mr Meyjes speak on comprehensive equipment failure and the dangers associated with untrained, incompetent foreign crews operating with dodgy qualifications, I think it is probably more due to the hand of God than the record of the industry. In connection to that reference to two major groundings over the past 11 years, was one of those outside the World Heritage area?

Cdre Nairn : Which ship are you referring to?

Senator BULLOCK: I am trying to get on top of a vast volume of material in no time at all. Were they both in the World Heritage area?

Cdre Nairn : Yes. Shen Neng 1 north-east of Gladstone and Bunga Teratai, which was just south of Cairns. Is there another one?

Mr Meyjes : Atlantic Blue was the 2009 grounding in the Torres Strait.

Cdre Nairn : Right, yes: that was in the Torres Strait area, outside the Great Barrier Reef area.

Senator BULLOCK: There you go; I have just improved your stats by 50 per cent!

CHAIR: As there are no further questions, thank you very much Mr Meyjes and Commodore Nairn for your submissions and for taking the time to appear before the committee. We appreciate your assistance.