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Thursday, 31 May 2012
Page: 6471


Mr EWEN JONES (Herbert) (09:41): I rise to speak on the shipping reform package. This legislation aims to stimulate investment in Australia's shipping industry through the use of tax incentives and to encourage further development of training opportunities for workers in the industry. The tax incentives which are provided in these bills seek to include accelerated depreciation of ships, income tax relief for Australian operators of Australian registered ships, a refundable tax offset for employers who choose to employ Australian seafarers and exemptions from royalty withholding tax for foreign owners who lease their ship to an Australian operator under a bareboat or demise charter.

These bills also seek to provide changes to our licensing system, with the introduction of a three-tiered system that includes: a general licence providing unrestricted access for Australian registered ships; a temporary licence providing limited access for foreign ships or those on the Australian international shipping register; and an emergency licence with restricted access for emergency situations, such as a natural disaster. Finally, they seek to create a second register of ships, the Australian International Shipping Register.

The coalition recognises the need to increase the role of shipping in our freight network. Over the last decade we have seen a drop in the number of ships registered in Australia, so that we are now left with only 22. Meanwhile, by 2020 our freight task will be double what it is now. Some of the slack will have to be picked up by increasing the role of shipping transport. We need the right policies to ensure adequate investment in our shipping industry to handle this.

The question I ask myself is: will these measures work? The response I get from my own reading and from conversations I have held with people in the industry is that they will not. Not only that; we have to be mindful of the consequences of enacting poorly designed and cumbersome legislation which may, in fact, have an effect which is the opposite of the intentions of these bills. That is why I believe that this whole suite of bills should be referred to the Productivity Commission. There will be consequences for a wide variety of industries, especially in places like my seat of Herbert, based in Townsville. We are a regional centre that is exposed to the tyranny of distance.

In contrast to the considered approach needed, the process of formulating this legislation has been disorganised and incomplete. After its initial release, it was determined that a major redraft of the Coastal Trading (Revitalising Australian Shipping) Bill 2012 was needed, but then only minimal consultation was undertaken before the legislation was tabled in the parliament. The House committee was given limited opportunity when compiling its report on the impact of these bills, and we are still waiting on the outcome of the Senate Economics Committee's equivalent report. This process has been rushed through and the result is legislation that could have serious unintended consequences for all Australian industries particularly those in regional centres. The coalition is certainly not alone in having reservations about some of the detail contained in these bills.

The changes made to the licensing system by this legislation will add more red-tape burden to the shipping industry. The licensing system involves the introduction of three new levels of shipping licence. This includes a temporary licence designed for vessels registered on the Australian International Shipping Register. This temporary licence is a real sticking point with both the coalition and with many of the industry stakeholders affected. The application for the licence comes with a set of prescriptive requirements. They include the provision of detailed information of expected loading dates, loading and discharge ports, and cargo type and volumes for the full 12 months duration of the licence.

How out of touch are this government that they expect industry to sit down and detail this information simply to apply for a licence? This is yet another unnecessary red-tape burden slapped on industry by this government. If we are not careful we risk regulating the domestic and international shipping industry out of the market rather than helping it to prosper.

To be eligible for the licence applicants are required to have a minimum of five voyages planned. While this is an improvement over the original minimum requirement of 10 voyages, contained in the draft legislation, it remains to be seen why a minimum number is necessary at all. While most shipping companies would well and truly exceed this number, it seems unnecessary to force the smaller companies to either change their operations or create fake trip plans to meet the licence requirements, and all this is for no explained reason.

The temporary licence does offer a variation to the number of voyages allowed only when requesting to add a minimum of five more trips. The allocation of a minimum number of trips is entirely unnecessary. If applicants find that they are able to do additional trips, why shouldn't they be able to amend the conditions of their licence accordingly regardless of how many trips they are doing? Once again, this is bureaucracy at its worse, which is something this government seems to be fantastic at. This requirement serves no purpose but to hold industry back for regulation sake alone.

All red tape comes at a price. When we burden industries with regulation, they in turn must increase their costs. These bills hurt the smaller players and will drive up the costs that other industries, like manufacturing, have to cop when it comes to shipping freight. Estimates have put these price increases at up to 16 per cent. Despite this very real risk, the government has not made any effort at all to price the cost impact that will result from this legislation. It is already acknowledged that Australia's shipping industry is more expensive than its international counterparts because of the higher costs involved with running an Australian ship. We should be trying to address that problem, not adding to it. Many parts of the industry, notably the Dry Bulk Shipping Users, have expressed concern at the impact of these bills. This is something that this House should know before it votes on the legislation. It is that simple. I believe that this legislation must be tested by the Productivity Commission before a vote is taken.

My electorate of Herbert has Townsville port which is a growing beast. It is capable of so much, and we have a team there who are proactive in their approach. The Townsville Port Authority is a very strong organisation. Our tonnage through the port is on a steady increase and I want to see that continue. If we can free up the port system and make it appealing and easy to put things on a boat, we will grow my port. If we make it harder and harder to do business, we will simply do less and less business especially in general freight.

Townsville is a major commercial and industrial hub for North Queensland. My city is situated on the Bruce Highway. On both sides of Townsville we are confronted with parts of this highway which are subject to flooding every wet season. To the south, places such as the Haughton River Bridge, Pink Lily Lagoon and the flats surrounding Giru are the first to go under water during the wet season. To the north towards Ingham we are faced with Cattle Creek, Gairloch and a number of other places which cannot be passed for weeks at a time during the wet season. If we had a viable, efficient, flexible and user-friendly port system, it would enable general goods to be shipped, especially from the south to Townsville for distribution. Every wet season as soon as a tropical low is detected in the Coral Sea many trucking companies initiate a transport levy because they know that at some stage they will have a refrigerated pantech sitting on the side of the road burning fuel while the driver waits to press forward over flooded roads.

If we make this legislation cumbersome, if we make it so hard for companies to pick up, transport and deliver goods, if we make it so hard for traders to access the services, they will simply walk away. That will have the effect of more trucks on the roads of North Queensland. We are not like Sydney, Melbourne, Brisbane and other areas. For the most part, the Bruce Highway is a two-lane road. When you put trucks on it, it gets busier. When it gets busier, we have accidents. Now, I am not blaming the truck drivers at all for the accidents, but I will state for the record the statistic that 16 per cent of all deaths on national highways—that is one in six—occur on the Bruce Highway. When a ship passes over the ocean the hole it leaves is instantly repaired. When a truck forces a hole in the road it is there until someone comes along, stops the traffic and fills it in. Added to that is the difficulty of shifting major machinery between major centres.

In early May I attended Battle of the Coral Sea commemorations in Cardwell, representing the true senator for North Queensland Senator Ian Macdonald. I was stopped at the northern base of the Cardwell Range. I was there for 45 minutes while a large tipper made its way over the range. Now, I do not know from where it was coming or to where it was headed, but the fact remains, if we cannot facilitate better port access, the trips for these large pieces of equipment will become more regular and travel farther along our highways. We need an efficient, productive and proactive port transport system which is complementary to getting the job done. We need things sped up, not slowed down. We need things which work for business—the ultimate vested interest—as they are the ones employing our people. My port has backload traffic from Papua New Guinea and Port Moresby of some 100 containers per week. If there is an opportunity to shift something we should be taking that opportunity and putting it through my port. In the transport game it is called a backload and the backload is the cream. If you can pick it up, you get your fuel paid on the way back. But if you are sending back empty containers then you are doing it for no particular reason.

These bills are full of burdensome regulation that serves no apparent purpose but does have very real consequences for shipping businesses, and for the Australian industry that relies on shipping freight. Given that the government has supposedly set out with the intention to foster and grow the shipping industry, it beggars belief that so many elements of this package may do exactly the opposite.

John Mullins, a good mate of mine, is a solicitor in Brisbane. His favourite saying is: perception is neither right nor wrong; it just is. If it is perceived that it is so hard to get things onto a wharf, so hard to get things onto a ship, then for those of us who do not have much interaction with the industry it just does not come up as an option for you. You simply will not think about it; you will just organise a truck to get it done. You will get heavy haulers to ship your stuff all the way through. We must make this industry appealing to people, to use the freight system, to use the port system and to get things up and down the coast. It has to be viable and efficient. But it must be perceived by the supplying public that it is an option.

As a consequence of these bills, I see more and more people will throw their hands in the air and say, 'It's just too hard.' That is the danger here: if we do not do this right, we will have more trucks on the road, more roads to repair and more deaths on the road. It is important that we do have a good maritime industry. But it is more important that it is cooperative, efficient, user-friendly and, even more than that, that it is perceived to be all those things. We must throw the mat out and we must ensure that these things are done correctly.