Mr REITH (Workplace Relations and Small Business) (9:31 AM) —I move:

That the bill be now read a second time.

Our government promised it would fix up the waterfront—its rorts, its inefficiencies, and its archaic work practices. And we meant it. We are absolutely determined to do all in our power to promote greater competition in the stevedoring industry. We will fully support employers who share our reform objective to greatly improve productivity and reliability. Our international competitiveness as a nation depends on achievement of this goal.

This bill, together with the Stevedoring Levy (Imposition) Bill 1998, delivers a key element of our commitments. They underpin the Commonwealth government's administrative arrangements designed to facilitate urgently needed restructuring. The bills raise a levy on stevedoring operations to fund these administrative arrangements and ensure that the industry is responsible for such funding and not the taxpayer.

These bills, and other administrative measures that I will announce today, are important elements in the government's shipping and stevedoring reform agenda. Improving the performance of these critical links in our transport and trading system is vital to Australia's economic well-being.

The potential benefits of waterfront reform are of vital significance to our national interest. The present arrangements, based on union monopoly, are costing Australia dearly. Our waterfront is inefficient, unproductive and unreliable by world standards. It prevents Australia achieving not only the immediate economic benefits flowing from maximising our international competitiveness but also, more importantly, the long-term improvement in the perception of our overseas trading partners of Australia as a reliable supplier.

This situation has gone on for far too long. When the government came into office in 1996, it inherited a stevedoring sector where productivity and reliability were in decline, despite a decade of direct government involvement in waterfront reform and commitment of some $430 million to the reform process.

Successive independent reports to the government on the progress of micro-economic reform, including the Productivity Commission and Industry Commission, have concluded that the stevedoring sector remains an impediment to the competitiveness of our manufacturing and primary production sectors. Business consistently expresses concern about the high charges, low productivity and unreliability of the waterfront.

That this situation prevails is not a consequence of government inaction. Since World War II, the Commonwealth government has played a direct role in specifically regulating both the stevedoring and shipping sectors, including administration of labour arrangements. The current industry structures can be traced back to this high level of government involvement.

On the waterfront, the most recent intervention was the Labor government's three-year program of reform from 1989 to 1992 whereby the government appointed Waterfront Industry Reform Authority (WIRA) oversaw the introduction of enterprise based employment to the stevedoring sector. Unfortunately, this expensive program failed to tackle the fundamental problem of the lack of competition in the stevedoring labour market.

By the end of the WIRA process, the control over the supply of operational labour had been concentrated in the hands of a single union, the Maritime Union of Australia. This has meant that the union has had the power to virtually tell stevedores how they should manage their business and it has largely dictated the terms and conditions under which any new entrant stevedore could operate.

Poor waterfront performance largely reflects the appalling state of industrial relations in the industry. There have been too many cosy deals, funded by the Australian taxpayer, that have failed to deliver the goods. Union recalcitrance, epitomised by the monopoly power wielded by the MUA, has consistently prevented or undermined changes to outdated work practices. As a result productivity and reliability remain low. Relative to our international competitors, our performance is getting worse and not better.

Enough is enough. Today the government is encouraging employers in both shipping and stevedoring to take immediate steps to normalise their employment practices in line with community standards. Australia can no longer afford to have monopoly labour arrangements in strategic economic sectors, like stevedoring and shipping, which adversely impact on their efficiency and reliability and thereby reduce our nation's international competitiveness.

In line with its election mandate and public commitments, the government has today taken decisive action to address this parlous situation. The Workplace Relations Act 1996 has provided the foundation for these measures by restoring the balance in the relationship between employers and employees, promoting freedom of association, and encouraging greater flexibility in the labour market. Industry participants, including new entrants, now have greater scope to pursue new working arrangements to bring performance of their businesses to internationally competitive standards by improving work force productivity and reducing labour costs.

Prospective employees, whether they choose to belong to a union or not, and irrespective of which union they might choose to join, will now have an opportunity to secure jobs in an industry that has been for far too long an MUA closed shop.

Awards are being simplified to ensure they form a genuine safety net. Matters of detail that are best dealt with at enterprise level are being removed. This is particularly beneficial to the waterfront sector where improved performance is reliant on increasing workplace flexibility and restoring management discretion and responsibility. Australian workplace agreements have been introduced as an avenue for direct negotiation and consultation between employers and employees.

For the first time there are now effective remedies against unlawful industrial action. The reinstatement of the primary and secondary boycott provisions to the Trade Practices Act 1974 provide affected parties with redress in the event of illegitimate industrial campaigns. These remedies ensure the necessary tools for participants in the maritime industries, as well as those businesses which import or export goods, to take effective action against commercially destructive industrial action. As an aside, the Labor Party have a public policy to repeal those provisions if ever they are to be re-elected, which is concrete testimony to the way in which the Labor Party are bound to the trade union movement and bound to the MUA on this issue.

On the waterfront, the government has reached an agreement with our two major stevedoring employers, Patrick and P&O Ports, to adopt seven key performance benchmarks as the basis for continuing improvement. These include an end to overmanning and restrictive work practices; higher productivity: we have commitments from the major stevedores to achieve a benchmark for container terminal cranes of 25 containers being moved per hour as a national average across the five major container ports; greater reliability through less industrial disruption and the elimination of outdated work practices: the level of industrial action on the waterfront should be no worse and preferably much better than the national average; improved safety: injury and fatality levels must come back to the all industries average or better; lower costs throughout the logistics chain to the waterfront gateway; more effective use of the technology available to increase productivity and ship turnaround times; and improved training.

The achievement of these reforms requires stevedores to implement significant structural changes in their operations and to manage the resultant rationalisation of their labour force. While the means of achieving these reforms is a matter for the industry participants to determine, the government has a vital part to play in ensuring the legal framework supports any lawful initiatives to implement more productive labour arrangements, including those adopted by new entrants to the industry.

The government also wants to assist restructuring by facilitating access to redundancy funding required to reduce excess labour arising from industry restructuring. The promotion of this restructuring is crucial if Australia is to have an efficient and reliable waterfront. The memorandum and articles of association will be provided shortly to the Australian Securities Commission to establish a wholly owned Commonwealth company to be called the Maritime Industry Finance Company. MIFCo will be a company limited by guarantee and headed by an independent chairman, Mr Anthony Clark, a managing partner in the respected firm KPMG. MIFCo will establish, under Commonwealth guarantee, a loan facility of up to $250 million from financial institutions which MIFCo may use to pay stevedoring employees a sum equal to their entitlements upon redundancy.

The intention is that MIFCo's operation should be administratively simple, while protecting the Commonwealth's interests, so as to ensure payments are made to redundant employees speedily, providing a deed of release is signed. In other words, those stevedoring employees who are made redundant will have made available to them arrangements to ensure payment of their full and very generous benefits accruing on redundancy. However, unlike the previous failed schemes, it is not intended that taxpayers will have to foot any part of the bill for reforms that are in the national interest. Those costs will be met and absorbed by the industry.

I now turn to the specific provisions of the bill to explain how this will be achieved. The levy arrangements proposed by this bill, in conjunction with the Stevedoring Levy (Imposition) Bill 1998, are modelled on the existing stevedoring levy legislation, the Stevedoring Industry Levy Act 1977 and the Stevedoring Industry Levy Collection Act 1977. However, the new arrangements are considerably simpli fied and, unlike the 1977 arrangements, they will not apply to bulk cargo. The performance of seaboard bulk cargo terminals is generally accepted as already being internationally competitive.

This bill provides the mechanism for collection of the levy imposed by the Stevedoring Levy (Imposition) Bill 1998 on the loading and unloading of containers and vehicles in Australia. The flat rates of levy that will apply upon the commencement of this legislation are considerably simpler than the administratively complex scheme applying under the 1977 legislation. Under section 7 of the bill, the levy is to be paid by the person who is responsible for the loading or unloading by way of contract, arrangement or understanding with the owner-charterer of the ship, which generally means the stevedoring company. The maximum rate of levy is set by section 5 of the Stevedoring Levy (Imposition) Bill 1998 at $10 per vehicle and $20 per container. However, the bill provides for a lower rate of levy to be prescribed by regulations. I intend to set the actual rate at $6 per vehicle and $12 per container.

Both the major stevedores have agreed that the levy at this rate can be absorbed into their existing structure of charges so that there is no overall increase in costs to shippers. The cost of these arrangements will be borne by the stevedoring industry itself. It is anticipated that not only will our importers and exporters not have to pay more but also, as workplace reforms are implemented, stevedoring costs will progressively diminish. Importantly, unlike the arrangements under the 1977 acts, the proposed levy arrangements will not impose any obligations on shipping lines or shipping agents.

The method of collection also is simplified under this bill. As provided by section 9, this will be by way of returns to my department at regular intervals on which payment of the levy is to be based. The secretary to the department can appoint inspectors, who are to be employees of the Commonwealth, or a state or a territory. They will have various powers to access premises and search for documents, as outlined in section 13 of the bill.

I have already indicated that the Commonwealth, through MIFCo, will require access to funding to support the removal of surplus labour through industry restructuring in advance of the receipt of levy payments. Consequently, the bill includes in section 17 the provision of a special appropriation allowing the Minister for Workplace Relations and Small Business to authorise payments that are directly or indirectly in connection with the reform or restructuring of the stevedoring industry, including meeting the cost of associated financing and administration costs.

The bill makes no provision for a `sunset' date by which time the levy must be terminated. It includes a mechanism in section 8 for the determination of the final levy month after which liability to pay the levy will cease. It is not the government's intention that the redundancy funding arrangements will be available indefinitely. It is anticipated that it will take six or seven years for the levy payments to meet the full cost of the redundancy benefits. I intend to conduct a review of the levy legislation and rate of levy within three years after its commencement.

Let me now turn briefly to that other area of the maritime industry in which the MUA continues to exercise monopoly labour control, the Australian shipping fleet. As a result of industry based pooled labour arrangements, extravagant crewing costs and outdated work practices, the Australian shipping sector continues to have the highest vessel operating costs in the world. Since the withdrawal of government administrative support for the seamen's engagement system, in February 1998, shipping companies have begun the move to establish company employment and significantly improve the crew to berth ratio.

I announce today that in order to expedite that process the government stands ready to provide a Commonwealth guarantee to any Australian shipping company which needs to borrow money in order to meet the cost of these redundancies in the Australian flag fleet. If in the future that guarantee is called upon, the government will amend the levy legislation to include shipping. The government's in-principle decision on this matter was advised to the union in December when the union advised the government of their expectations of redundancy and their acceptance of those redundancies as part of the reform process.

Conclusion

The Australian stevedoring industry is on the threshold of a new era when, for the first time, employers and employees will have the motivation and mutual confidence in their future prospects to strive to achieve world best practice standards in productivity, reliability and international competitiveness. The government has identified the reforms that must be addressed by the industry to reach this goal and has provided the necessary legal framework to facilitate their implementation. They have been accepted by Patrick's and P&O Ports, the major stevedoring companies. This legislation underpins the administrative arrangements necessary to actively encourage the stevedoring industry to tackle the fundamental restructuring required to achieve the government's reform agenda.

A strong foundation has been established on which to build a revitalised stevedoring sector. The measures being implemented today are vital in raising Australian living standards, creating more jobs, promoting a stronger export culture, reducing our foreign debt and expanding the opportunities for small business. They are measures which will allow considerable productivity improvement, ensure redundant employees receive the value of their full entitlements, involve no cost to our export and import industries and, subject to the passage of this legislation, will not impose any cost on taxpayers.

I conclude with my opening words: we said we would fix the waterfront and we meant it. I commend this bill to the House. I present the explanatory memorandum to this bill.

Debate (on motion by Mr Beazley) adjourned.