Mr BEAZLEY (Leader of the Opposition)(10.40 a.m.) —I want to intervene briefly in this debate basically because, while the Shipping Grants Legislation Bill has not necessarily attracted a great deal of public attention to this time, we are a maritime nation both in terms of our trade and our national security. We are also a maritime nation in terms of our social amenity, as most of our population lives on the coast. The environmental issues entailed in the way we pursue maritime policy are also important.

I do not know what the previous speaker, the member for Lyne (Mr Vaile), thinks he is going to do with ANL at the present time, but I can tell him exactly what he would be able to do with ANL if this bill were to pass and if he were to get the way of his minister on the subject of cabotage. I suspect that cabotage will be dealt with in the not too distant future in a related bill. What he will be able to do then with ANL is take out the Australian Navy and provide them with sorrowful target practice on the way to the bottom, because there is absolutely nothing else you will be able to do with the remnants of that organisation.

This bill and the other propositions that this government is pursuing render our maritime industry null and void. This is the death knell of the Australian maritime industry. It does not matter what clever game the government thinks it is playing in this area, this is a manifestation of prejudice, in the form of policy, to the great detriment of the national interest. It is not as though it is being done to an industry which has exhibited great strength; it is not as though it is being done to an industry that is otherwise than in strict survival mode.

When the United Kingdom went through this process in the late 1970s under the influence of the Thatcher government, we witnessed the destruction of the greatest civil maritime nation in the world. The British used to say that their diminution in international standing was a product of the loss of empire and the consequences of their having to fight two wars that were enormously economically debilitating to that nation.

Whatever happened with their empire and those wars, it did not happen to the British maritime industry. What happened to the British maritime industry was Maggie Thatcher. They have gone from a point where they had some 2,000 ships plying international trade down to about 200 now. That is the position they got into. They were very lucky during the Falklands War that that depredation had not proceeded so far that they were in the position of having no ships to fight with. They were very lucky to catch it at that early point. If they had to fight that war over again, they would be in a materially more difficult position than they were in then.

For the information of the previous speaker, it was not a product of privatisation; it was a product of the removal of precisely these sorts of financial supports to the British system. The Europeans paid no such attention to that sort of nonsense. The Europeans, with whom our international traders compete internationally, have these sorts of financial arrangements and more. They rigidly adhere to cabotage around the European coastline and, on the basis of all that, they produce a massive maritime industry. They have sustained it against the depredations of flag of convenience countries. They have survived on the basis of that and they maintain their maritime position through cabotage and these sorts of support mechanisms.

This is not about creating an even playing field; this is about destroying the last vestiges of the playing field on which our international shippers can play—and they are not thanking you for this initiative. Your hatred of the seamen and the MUA is all very well when you are standing on the barricades and waving your flags, but it does not sit very well with the poor devils who are employers—the people who are out there trying to make a quid, assist our balance of payments problems and trying to ensure that Australia maintains a maritime industry.

I will quote from Robert Hartley, the Manager of Maritime Policy for the Australian Shipowners Association. They are used to dealing with the Minister for Transport and Regional Development (Mr Sharp) in this area and they have a kindly view of him. He has been trailing around their offices for years being educated by them. But they did not comprehend that education does not necessarily cure prejudice; it merely gives it a wider stage. This matter has provided this minister with a wider stage. He has read everything, knows everything and understands nothing. So they said gently:

The minister, Mr Sharp, has expressed a belief that under the coalition plan for an Australian second register and dismantling of cabotage, the increased competitive environment will rejuvenate shipping and lead to an expansion in the Australian flag fleet.

The ambition for a healthy, expanded fleet is admirable and we shall endeavour to see whether it can be made to work. In the meantime Australian shipowners have to carry on business as usual, which indeed they will do, until competition from foreign government assisted shipping with cheaper Third World crews makes the business of running Australian flag and crewed ships in international trade uneconomical. In the current hiatus new investment in Australian tonnage is already being put on hold. I understand that there are some three ships to which this will apply retrospectively, in effect. It is a massive breach of faith with the Australian shipping industry.

And haven't they ever performed? Since those reforms were put in place in the waterfront in the mid-1980s, some $2 billion worth of investment has gone into the Australian shipping industry, and that was in a very short time. As I said before, it is an industry which we cling to with our fingernails. What a gesture of confidence for people who understand that they have to operate in an international environment where you have flag of convenience crews operating and where the employers of those flag of convenience crews do not care whether their ships sink or float, provided they can make a quid out of it at the optimal opportunity!

The Australian shipping industry are competing with them. They are probably taking on board a greater challenge than any other section of Australian industry. They put $2 billion into it on the basis of the changes that were made by the Maritime Union in relation to the crewing arrangements of ships. Those changes were enforced, taking crew numbers down from something like 31 a ship to 18 a ship—enforced by their willingness to acquire, or repair or refurbish the sorts of ships that could sustain that crewing level. So the crew numbers went down from 31 to 18 and $2 billion was invested. We have the advantage, therefore, of having a shipping industry that is approximately half the age of the international average—in other words, a shipping industry capable of delivering a substantial performance outcome.

It is not as though those reforms of crewing levels have not been accompanied by other reforms on the waterfront. For example, in the handling of bulk cargoes we have had an improvement of 60 per cent over this period. The national average cost of loading or unloading containers declined by 29 per cent in the early 1990s. Competition passed these gains on to shippers in the form of lower freight rates and higher trade, with the BTCE estimating the total benefit to all shippers in 1993 at $276 million, of which $200 million accrued to Australians.

The government, sustaining its attack on the MUA, of course now seeks to pooh-pooh those sorts of figures and suggests their irrelevance. Yet every day or every month new agreements for better practice on the waterfront are being reached. There is a total awareness, as far as that industry is concerned, of its need to improve its performance constantly. But one thing they all agree is the central thing for improvement in productivity—be they stevedoring companies, shippers, the workers in the industry or those who use that industry—is the capacity of the companies engaged in the process to refurbish that industry, to provide it with capital infrastructure which modernises it. That is absolutely critical to the improvement in productivity.

In the same way as work practices are ignored by this government as the central problem in the stevedoring industry, the government also ignores the fact that in the shipping industry the central problem in productivity is the lack of investment in the capital infrastructure. It is even more important that those investment decisions are taken in order to give us a chance of being internationally competitive at all. So not only does our Australian shipping industry have to compete with those flag of convenience crews, but also it has to compete with the well subsidised, well supported European, American and Japanese fleets. It is not as though it necessarily does it terribly well in this sense.

As I said before, it clings by its fingernails to its capacity to provide a service to us. For example, Australian resident operators' freight on imports and exports is worth just over $1½ billion a year, or about 13.7 per cent of the total. Foreign operators are now at $10.5 billion, about 86 per cent of the total. So, as I said, the industry is clinging to it by its fingernails, but that has a tremendously important impact upon our balance of payments. If you take that $1½ billion out and add to it about $600 million worth of trade on the coast, if that subsequently gets done by foreign crews, you punch a $2 billion hole in the balance of payments position—because of this piece of arrant arrogance and stupidity, this breach of faith with the shipowners of this nation.

I said before that there are other factors involved in this. I mentioned environmental factors. If you start to build up a flag of convenience crew ship operation around our coastline—we already have it, of course, in the international shipping arrangements—in a very short time you will start to get a threat to the major tourist industries of this nation. Most of those major tourist industries lie on the coast of this country, and most of them lie on the north-east coast of this country. Those areas will be where surveillance is at its worst by virtue of their distance from population centres. It will take just one or two savage accidents in those areas and the tourism industry there will shut down. In taking ourselves out of the maritime industry—as this legislation would do—we would be removing a whole basis of expertise on surveillance anyway as far as these sorts of areas are concerned.

I mentioned too the issue of national security. There is a very interesting statistic again involving some investment by shipowners that the government has taken upon itself to persecute. There are memoranda of understanding between the defence department and our seven major shipowners. They cover around 40 ships to provide assistance in case of a national emergency. A number of those shipowners have, at their own expense, fitted ship-to-ship refuelling facilities and other modifications specifically to assist the navy. Australia's defence forces depended on merchant seamen for emergency manning in both world wars, and during the Falklands War the Royal Navy was able to rely on 53 ships from 24 different companies for troop transport, communications and supply.

When I was defence minister, I directly experienced what all this meant. You might well say that that is out there in the distant never-never and not to worry about that sort of thing. We decided to finally test a division in the north of Australia. We decided to mobilise that division by taking it essentially from the south-east and western corners and putting it in the north in a timely way—the sort of response time we would need in international conflict—and to supply it. It was as heavy a division as we normally provide. There were tanks, artillery and other heavy weapons associated with it.

Most of it had to be carried up the Stuart Highway. We discovered from that that, grateful though the Northern Territory government was that we were spending that much money in the Northern Territory and that they were getting a bit of attention in an area that interests them—defence—they were not grateful that the tourists who plied the Stuart Highway found themselves locked into slow-moving convoys with tank transporters proceeding in front of them. They did not enjoy the experience. They had a very substantial look at the exhaust pipes of a number of very interesting heavy transporters but, apart from that, they had less enjoyment than they could normally expect to get from the Northern Territory.

But, even with all of that, one-third of that division's supplies had to be sent by sea. One-third of the supplies to sustain an Australian effort in the field had to be sent by sea. The notion that we could do that without an Australian maritime industry is laughable. I am not talking about sending Australians to do anything in Papua New Guinea or anywhere else. I am talking about sending Australians inside Australia to do things inside Australia for the defence of Australia. That is what we are talking about here. One-third of the supplies had to go by sea, and that was a very generous interpretation of what it was that we had to do. In fact, it would have been a great deal more efficient to send a lot more by sea.

I once had the pleasure of discussing the relative merits of sea transport against other forms of transport for defence purposes with a chap who headed the NATO command for the area adjacent to Europe. It is the only NATO command not commanded by an American. It is commanded by a Britisher for auld lang syne. It is commanded by him because of Britain's once great reputation in the maritime area.

I said to him, `This is all a bit out of date, isn't it, Admiral? These days you could send all this by air transport.' He said, `Well, let me tell you this, sport'—he did not actually use that expression but called me `Minister'—`if you took 20 of the biggest American army freighter planes'—I think a Starlifter or a Galaxy; it was one or the other—`and flew them end to end 24 hours a day for 10 years, you would provide sufficient ammunition for war on the central front for six weeks. That is what you would do if you rendered yourselves reliant upon air transport. That's why we like to keep sea lanes open, Minister. It's the only way the Americans can get here.' That was an interesting demonstration again of the absolute significance of the maritime industries to the national security of the nation.

So this bill is no joke. This little piece of revenge on the MUA is massively destructive of our balance of payments, massively destructive of Australian industry, massively destructive of our national defence and potentially massively destructive of our marine environment. This minister is a classic. This sort of semi-educated minister in his portfolio jumped the starter's gun. He got that starter's gun when they swore him in a couple of days after the election and, instead of holding the darned starter's gun in the air, he pointed it at his foot.

What he has been doing with that starter's gun ever since is pointing it at the foot of Australian industry—be it in the railway area or be it in the absurd set of propositions we are now left with at Sydney airport. Having failed to bite the bullet on the privatisation of Sydney airport at the appropriate time and get a bunch in place at Sydney airport with an obligation on them to develop a second airport out at Badgerys Creek—that is what was entailed in that privatisation proposition—those opposite squibbed it for the electorate of the Prime Minister (Mr Howard) and have found themselves wandering around in never-never land ever since. The great micro-economic reform task that was in place to fix up the aviation industry in Sydney has been wrecked. The great task of keeping us in the Australian maritime industry, an industry absolutely vital for the national security of this nation, is in the process of being wrecked.

This is an exorable bill that requires rejection by this parliament. Above all, it is a bill that requires the understanding of this parliament. It is a bill that really needs to sink into the minds of the Australian citizen, because the Australian citizen accepts too readily the notion that we are a maritime nation without seeing the evidence of it and without necessarily seeing what is required to keep us in that industry.

We are in it only by the very skin of our teeth. We are in it only by the sorts of propositions that are being rejected here today. We are in it only because our government was prepared to create a level playing field and take away the impediments to maintenance of an effective maritime industry—be it the reforms necessary in the labour market or the reforms necessary in support mechanisms for our shipowners via the taxation system. We did no more for that industry than has been done by the European nations to support theirs and we did a great deal less for it than has been done by the United States to support theirs, but what little we did is now being removed.