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Thursday, 31 May 2012
Page: 6493


Mr ZAPPIA (Makin) (11:10): I am going to speak briefly in support of the shipping reform bills, because I believe this is good legislation and much overdue legislation. This legislation delivers on commitments that Labor made to the Australian people in both the 2007 and 2010 election campaigns.

In a country where 99.9 per cent of our trade is moved by ships and shipping tonnage is increasing, we simultaneously are seeing the demise and—the way we are heading—the ultimate wipe-out of Australia's shipping industry. These bills replace outdated and irrelevant shipping laws, provide consistency of shipping laws across Australia, improve safety for Australian seafarers and establish the national marine safety regulator, consistent with national regulators being established for the road and rail transport sectors. The bills also encourage investment in Australian shipping through the Australian tax system. The consistency of shipping laws across Australia, along with a single national marine safety regulator, will lead to a reduction of red tape and productivity benefits worth an estimated $30 billion over 20 years.

Shipping is critical for international transport; and for Australia, being an island country, that is even more the case. More than 99 per cent of Australia's international trade is carried by ships, yet only 0.5 per cent of our exports are carried on Australian flagged vessels. That will be even more the case in the years ahead as exports of Australian resources grow, with the Australian freight task expected to triple by 2050.

Shipping, however, has not been without its problems or without its risks. Environmental disasters both within and outside Australian waters are becoming all too frequent. By all accounts those disasters in most cases arise because shipping operators, in order to cut costs, either use unseaworthy or poorly maintained vessels, employ untrained crews, employ insufficient crews with crews having to work unreasonably long hours or do not comply with shipping standards, knowing full well that there are poor compliance regimes in place in many parts of the world. In some cases it is a combination of all these factors. This legislation seeks to address those matters. It also seeks to ensure that workers employed in the shipping industry are provided with the level of protection that our industrial relations laws provide to other Australian workers.

Over recent decades we have seen the decline of Australia's shipping industry and the growth of foreign owned and operated shipping lines. In just over a decade—as other speakers have pointed out in the House time and time again—the number of Australian flagged ships has more than halved, falling from 55 ships in 1996 to about 21 today. Much of that change relates to the Australian domestic shipping trade where only three or four—I am not sure of the latest figure—Australian flagged ships are operating international trade. Foreign owned and operated vessels not only have taken over almost all of Australia's international shipping work but today carry about one-third of our domestic shipping work as well. About 1,000 seafarers' jobs having been lost to overseas operators over the last decade, and with the lost jobs come lost tax revenue and a worsening of Australia's balance of payments position.

Today Australia has an estimated international sea freight net debt of about $7.8 billion. We have an Australian trading fleet with an average age of 19 years, compared to a global average age of 12 years. The Shipping Reform (Tax Incentives) Bill 2012 and the Tax Laws Amendment (Shipping Reform) Bill 2012 are specifically intended to reverse this decline in Australian shipping investment by making tax laws applicable to Australia's shipping industry comparable to those applying in other countries. Furthermore, with Australia's shipping activity being the fourth largest in the world yet with Australian flagged ships carrying only 0.5 per cent of the cargo, there is an obvious opportunity for Australia to value-add to our resources exports by increasing our shipping operations. Why should overseas flagged shipping operators and not Australian ships carry Australian resources? This is a major industry with huge existing and future business potential which Australia is well placed to capitalise from. Yet, we have been sitting back and watching the opportunities presented by Australia's resources boom sail past us.

In too many places across the world the shipping industry continues to crew ships with what is effectively slave labour. Ships are using unskilled crews to work on unsafe ships, with no working rights and working under dreadful conditions with little or no pay. Other members in this place have referred to the 'ships of shame' debacle. Regrettably, that is what members opposite are prepared to turn a blind eye to by opposing this legislation under the guise that it will add to shipping costs for Australians. The exploitation of any worker should be condemned, and fair working conditions should apply to all people regardless of which country they originate from. I very much doubt that any fair-minded Australian would want to profit or benefit from the exploitation of others. Furthermore, I have seen no evidence that money saved by exploiting ship crews is passed on to the exporters, the importers or the consumers. The fact, however, is that a modern shipping operation with modern vessels and well-skilled crews with good working conditions can be competitive, and that is what this legislation seeks to achieve.

The House of Representatives Standing Committee on Infrastructure, Transport, Regional Development and Local Government presented a unanimous report on this matter in October 2008. Each of the key recommendations of that report has either been implemented by the government or is under consideration. Those recommendations, in conjunction with this legislation, are designed to encourage investment in Australian shipping by having a range of tax benefits which in turn will level the playing field with Australia's international competitors. The Australian Shipowners Association has stated that the tax concessions may trigger up to $4 billion in investment.

The opposition and others opposed to these reforms have made several claims and assumptions which are simply not correct. Some of those assertions arise from a report prepared by Deloitte Access Economics. The fact is that that report is factually incorrect with regard to the operation of the new licensing system. That in turn leads to several incorrect assumptions of likely economic impacts. Temporary licences will not be phased out in five years, nor will it be the case that all coastal cargo will be carried on an Australian licensed vessel. There are no plans to restrict the number of foreign vessels in Australian waters, and foreign vessels operating on Australia's coast are already required to pay Australian wages.

There are other objections being raised, which are also based on incorrect facts and assumptions, and I do not intend to address each of them individually. What is clear, however, is that without these reforms our shipping industry will slowly disappear. That may suit some members opposite and some industry sectors, but it is not in the national interest. This legislation will revive the Australian shipping industry, and I take this opportunity to commend the minister for the work he has done in bringing this legislation to the House, and I also commend the legislation to the House.