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Thursday, 31 May 2012
Page: 6482


Mr BRIGGS (Mayo) (10:30): I rise to support the amendment to the Shipping Reforms (Tax Incentives) Bill 2012 and related legislation moved by the shadow minister for transport and the Leader of the Nationals to send this bill to the Productivity Commission for a thorough inquiry. I think the bill before the House, as it is currently drafted, is flawed because it will add much red tape to an industry already under pressure and it will add to cost pressures in an extraordinary way.

When introducing the bill, the Minister for Infrastructure and Transport in his second reading speech couched these reforms in terms of saving and creating Australian jobs, and he has said that in the media on several occasions since then. The previous speaker, the member for Freemantle, said that as well. But what those in the government forget to mention is that the impact of increasing the costs on shipping will affect the flow through effects for businesses using coastal shipping and hence affect Australian jobs greatly. They forget to mention this rather important point. If you are trying to protect an industry, as this bill is essentially trying to do, adding a tariff will affect Australians, whether they are in the mining sector or in the sugar industry. I noted with interest the submissions from the sugar industry on this bill, which I will come back to.

The freight network is absolutely vital to the Australian shipping industry, given our location in world. We desperately need a prosperous and a low cost, as much as that is possible, shipping industry to move our goods. Sea transport carries over 99 per cent of international cargo by weight and 75 per cent by value. Coastal shipping carries about one quarter of interstate trade. It is true that there has been a decline in the number of Australian registered ships over the last decade, and currently there are only 22 Australian registered ships. With our freight task set to double by 2020, and treble along the eastern seaboard, coastal shipping will and must play an increasing role. That is all true and that is why we have said, through the shadow minister for transport, that it is important that we have a discussion about reforms to the shipping industry. But we think this approach from the government is flawed and that is why we do not support the current bills and we say that they should be sent to the Productivity Commission, the most qualified agency of government to give genuine consideration to the impact of these reforms.

In relation to Australian jobs, in conjunction with events outside this parliament in recent days, we have seen the Labor Party at times use arguments—which are a little difficult to understand given some of the other arguments they are using—where they claim during every question time that people are being too negative in this place and are scaremongering, particularly in the angry rhetoric of the Prime Minister, but in this debate we see them using that same angry rhetoric trying to scare people into thinking that the opposition is somehow trying to do over Aussie jobs and stand against necessary reform, which will make it easier for Australians to get jobs and our shipping industry survive. Nothing could be further from the truth. We are entitled to, and we should, pursue arguments where we think there is a problem with legislation, where we think the position put by those opposite is flawed. And we think this is badly flawed.

I refer particularly to the comments from the member for Wakefield. I was surprised and disappointed with the argument he used, especially towards the end of his contribution, where he compared the opposition's position on this bill to the opposition in the House of Commons over 100 years ago to the abolition of slavery. I want to put this in the context of what we see in question time every day.

Mr Ramsey interjecting

Mr BRIGGS: It is hyperbole at its worst level, as the member Grey so rightly points out. We hear the government complain every day that the opposition is trying to scare people about the carbon tax and on 1 July this great, wonderful and incisive policy will begin, which will mean that the sky will not fall in—it is a great reflection of a policy that the best thing you can say about it is that the sky will not fall in. When we are opposed to reform which we think will increase costs and impact on the ability of Australia to export our minerals at a time when we should be getting as much out as we can, you have the member for Wakefield comparing our position to those who opposed the abolition of slavery. It really does put the Labor Party's current problems into context. It is not surprising given the reaction we have seen to the very wise and appropriate announcement by the minister for immigration and the Minister for Resources and Energy last Friday and the counter reaction from some of their supporters in the union movement. That provides the context of the game that they will play.

The member for Grey in his very good contribution referred to a story which was released yesterday about the potential impact of this bill. If you look through the submissions these points are made by an overwhelming number of the submissions. By now you have seen what the submissions predict may happen, come into force. You have seen WWL, an international shipping line, announce, regrettably, that it is unable to commit to carriage of coastal cargo after 1 July because of fear and uncertainty about the red-tape costs and about the additional costs that this bill, if it were to be passed by the parliament, would put on this industry. You can have no starker example than a company announcing a month before 1 July that post 1 July, if this bill goes through, it will not be able to commit to continuing their operations in Australia. That is a genuine concern, and that is why we say that the amendment moved by the shadow minister for transport is an appropriate amendment, in order to move this bill off to the Productivity Commission for them to have a considered look at the potential impacts before this parliament goes ahead and passes this bill.

If you go through the submissions, there are some very important points. I referred at the beginning to the sugar industry, which relies very much on the coastal transportation of its product. I quote from Sugar Australia's submission:

In summary Sugar Australia ships about 300kta of raw sugar from North Queensland to its refinery at Yarraville Melbourne. This is carried today in licensed vessels which are internationally flagged. They will be subjected to the transitional arrangements and will end up as General License vessels under the proposed legislation. This will increase the costs of coastal shipping by 10-16% according to a study by Deloittes Access Economics1 and reduce business flexibility. As an internationally traded commodity, it is difficult or not possible in the majority of cases, to pass on any additional business costs. In this case it is likely that the cheapest supply chain option will be pursued which could involve importing raw sugar from Asia to Melbourne and exporting raws from North Queensland.

It goes on to say:

By way of example the additional cost arising from the application of the Fair Work Act to international container ships (there are no Australian flagged container ships trading east coast to west coast) resulted in a loss of almost 30% of the Perth sugar market to Australian producers that demand being supplied by Malaysian refined sugar.

So, if we talk about Aussie jobs, there are some good examples from Sugar Australia in its submission.

CSR Ltd says in their submission:

CSR is concerned by the potential cost increase, loss of flexibility and additional red tape that will occur as a result of this policy.

They also refer to the study by Deloitte:

This adds to recent freight cost increases and the prospect of importing raw material from Asia and substituting that for Australian sourced material. This adds to the burden of other costs being added to Australian manufacturing eg carbon tax, VEET charges in Victoria etc, not faced by international suppliers.

That policy which will mean that the sky will not fall in on 1 July, of course.

We also have the Minerals Council of Australia. They were lectured last night by the Prime Minister about how it may be hard for them but they just have to get over it and get on with it, and, 'Don't worry that we're putting additional pressures on you and making it harder for you to do business,' and making investment decisions in Australia harder. It is like the Olympic Dam decision in South Australia, which looks now, very sadly, like it will be delayed because of federal government policy. The Minerals Council says:

The Minerals Council of Australia is concerned that the ramifications of the final versions of the Bills have not been properly examined.

Thus, if you look at the amendment we are moving it should be supported. Let the Productivity Commission have a genuine look at this. It continues:

Removing the flexibility of the coastal trading licencing system to adapt to the shipping requirements of customers engaged in highly competitive markets may be counterproductive.

The Business Council of Australia has also expressed concerns about the additional red tape and costs associated. These are the people who use the service. They represent the businesses who know what the cost impact will be.

When there is a cost impact there is an impact on the ability of these businesses to employ Australians. That is the truth; that is the flow-through effect. There is an effect on our ability to compete, for our mining sector particularly. Take advantage of this one-off situation in the world, in our region, with this amazing growth! The government approaches the mining boom as if Australia is the only country that has resources. They approach it as if we are the only place in the world where China, India, Malaysia and the Asian developing countries can come to get the resources they need to ensure that development. Of course it is simply not true. It is a highly competitive industry and, if there is demand other countries will seek to supply.

We are seeing already Australia losing market share because of the cost impact of the decisions that this government is making. Jac Nasser, the chairman of BHP, made it perfectly clear just two weeks ago in a long speech where he said that international decisions about investment by that Australian company are now being put at risk in Australia. Tom Albanese from Rio Tinto said that now he gets asked regularly, 'Are you afraid that you are too Australia-exposed?' That is a shameful thing for an Australian executive to be asked, and it is because of the policies that this government is pursuing; whether those be the 'sky-not-falling' policy, the carbon tax, which will start on 1 July, or this policy, which will increase the costs of business and the ability of people to be able to do business in our country.

The key points in the Australian Dry Bulk Shipping Users' submission to the committee inquiry that has looked into this issue were:

The Government’s proposed Coastal Trading Bill 2012 should NOT be passed through the Federal Parliament until it has been properly scrutinised as to whether it is an economic and productivity reform as it:

Promotes protectionism of Australian shipping without concern for the impact it will have on Australian manufacturing and industry;

Will significantly impact on Australian manufacturing and industry costs;

Will encourage foreign product imports over Australian industry;

Is being incorrectly promoted as an environment and security reform; and

Provides too much discretion to the Minister which can lead to further instability and uncertainty than the current arrangements of single voyage and continuing voyage permits.

It could not be clearer. It also says, as the shadow minister for transport has made very clear, that this should be referred to a Productivity Commission inquiry. Finally, the last submission I will refer to is that of AiG. Some on this side have criticised AiG for being too close to the Labor Party. There have been some changes in the management of the AiG and I am confident that may lead to some changes in approaches. They are even critical. They make the same points that this should be scrutinised by the Productivity Commission. It is important that is the case.

What says to us that this is a little deal with the MUA, the big donors to the Labor Party, when the MUA always says it is not? In the Financial Review today, you have the MUA—and I note they are here watching today to ensure the debate goes properly for them—saying that it has nothing to do with them seeking IR by stealth. Of course, it does not and that is why they saying it out loud!

This bill should not pass until it has gone through the Productivity Commission. It will add costs, it will impact on Australian jobs in manufacturing and mining. It is a bad piece of legislation. It continues the run of very bad legislation that this government moves and they should support the shadow transport minister's amendment. (Time expired)