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Monday, 28 May 2012
Page: 5710


Mr SYMON (Deakin) (15:22): I speak against the amendments moved by the Leader of the Nationals, but I do speak in support of the Shipping Reform (Tax Incentives) Bill 2012, along with the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012, the Coastal Trading (Revitalising Australian Shipping) Bill 2012, the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012 and Tax Laws Amendment (Shipping Reform) Bill as moved by the minister. Together these bills form the government's legislative package, titled Stronger Shipping for a Stronger Economy, which delivers on Labor's 2010 election commitment to revitalise Australia's shipping industry.

These bills are designed to turn around the decline in Australia's shipping fleet by introducing a zero tax rate for Australian shipping companies. In addition to this, there will be accelerated depreciation of vessels, with a 10-year cap on the effective life of those vessels rather than the current 20-year cap. I think that it is interesting to note that the average age of Australia's shipping fleet is now almost 20 years. That should be compared with around 12 years for the rest of the world.

This bill also provides for both rollover relief from income tax if a vessel is sold and an exemption from royalty withholding tax for the lease of ships. There is also a seafarer tax offset for salary, wages and allowances that are paid to Australian resident seafarers who undertake voyages on qualifying vessels, providing that the seafarer is employed on voyages for at least 91 days per year with their company. Importantly, this provision will remove the current disincentives for companies employing Australian workers in the shipping business.

There will be additional requirements placed upon shipping companies accessing the income tax exemption. For instance, they will be required to comply with a mandatory training requirement for crews, and I think that is very important in an industry such as the maritime industry where it is not that easy to get in, for a start, and where it is very hard for many people to undertake training. Having some sort of lever there through the tax system is always going to be a great way to make sure that more people do get the opportunity to work in that industry. Companies that access the tax exemption will also have to show a substantial proportion of commercial, technical or strategic operations in addition to the crew management based within Australia.

As has been said, today there are only 21 Australian-flagged vessels left, and only four of those operate internationally. Yet in 1996, when the Howard Liberal government came into office, there were 55 Australian-flagged vessels operating. The Howard government tripled the number of trading permits issued to foreign flag crews from fewer than 1,000 in 1999 to around 3,000 in 2007-08. Whilst other countries around the globe were rebuilding their shipping industries, the Howard Liberal government was abandoning Australia's own shipping industry. By the year 2008, less than one half of one per cent of Australia's export trade was being carried by Australian ships. That is one half of one per cent of the 834 million tonnes of international cargo that came into or left Australia that year in over 4,000 ships and another 52 million tonnes of cargo that was moved between Australian ports.

I found an interesting article from Paddy Crumlin, the MUA National Secretary, published in last year's autumn-winter Maritime Workers' Journal. In it he quotes from a report prepared for the government in 2008 by Meyrick and Associates. It estimated:

… that a 5% increase in the use of Australian-flagged vessels on the main international bulk trades could result in an aggregate Australian fleet increase of some 20 vessels, rising to almost 40 vessels with a 10 per cent share increment and 75 vessels with a 20 per cent increment.

Of course that is a long way from one half of one per cent. Meantime, countries in the rest of the world such as the UK, Germany, the Netherlands, France, Japan and South Korea have embarked on successful programs to build their nations' shipping industries.

As we all know, Australia is an island and we cannot survive without shipping to move our exports for sale and for bringing goods for importers for local consumption. Our ports currently manage around 10 per cent of the world's entire sea trade with a value of $200 million in cargo moved every year. In the next two decades it has been predicted that trade at Australian ports will triple, and there should be no reason that Australian-flagged vessels and Australian seafarers are not part of that staggering growth.

Reducing the costs for Australian ships to operate would increase their competitiveness against foreign-owned ships and these bills help create a level playing field for Australian shipping. That is not only for international trade but also for our domestic shipping where currently 30 per cent of our coastal cargoes are being carried on foreign vessels, comprising some 470 ships at the present time.

The establishment of the Australian International Shipping Register, along with the establishment of a seafarers bargaining unit and the introduction of other important reforms for manning and safety standards, will enable Australian shipping companies to compete on this level playing field internationally by removing the cost disadvantages that I have described Provisions such as mixed manning will require that international registered vessels have a minimum of two Australian crew, preferably the master and the chief engineer, where currently there is no requirement. The Australian International Shipping Register will also implement competitive pay rates and conditions that are consistent with the Maritime Labour Convention including the provision of worker's compensation. Ship owners will have to take out insurance cover for their workers to at least the level provided for in the International Transport Workers Federation Uniform Total Crew Cost Collective Agreement. Conditions such as these will create a safety net for international seafarers employed on ships that are on the register, and, importantly, ships on the general register will not be able to avoid Australian domestic legal liabilities by joining the international register as there is a requirement in the bills that vessels must be predominantly engaged in international trading and that they only have limited access to coastal trading. These bills will also amend the Occupational Health and Safety (Maritime Industry) Act 1993 so that there is no doubt that the act will apply to a vessel engaged in coastal trading, whether that is a vessel with a general licence, a temporary licence issued under the Australian International Shipping Register or an emergency licence issued under either register.

These bills have a long history. They have not been around as bills for all that long, but the issue has certainly been around for a long time and was, indeed, dealt with in the last parliament by the House of Representatives Standing Committee on Infrastructure, Transport, Regional Development and Local Government. That committee is no longer in existence—it is now the House of Representatives Standing Committee on Infrastructure and Communications, and I am a member of it—but it did produce a report called Rebuilding Australia's coastal shipping industry following an inquiry into coastal shipping policy and regulation. That was back in October 2008.

There were many key policy recommendations in that report which, I am very pleased to say, these bills do pick up and address. The policy recommendations such as reform of part VI of the Navigation Act 1912, the Navigation (Coastal Trade) Regulations 2007 and the Ministerial Guidelines for Granting Licences and Permits to Engage in Australia's Domestic Shipping now appear in the legislation before the House. The implementation of a single national approach to maritime safety for commercial vessels was also recommended and, again, that is in this package of legislation. The committee report also recommended the introduction of an optional tonnage tax regime in Australia that is linked to mandatory training requirements. What we see in the bills before us actually goes beyond that: rather than having a tonnage tax, the proposal is for a zero tax rate, which means less red tape and is a world-leading proposition.

The 2008 report also called for the reintroduction of accelerated depreciation arrangements, which most certainly is in these bills. That report also called for the creation of a national port development plan to address current and potential capacity constraints in Australia's ports, and that was done with the release of the National Ports Strategy in January 2011. There was also a recommendation for a review of section 23AG of the Income Tax Assessment Act, which has been dealt with in these bills before the House, and a recommendation for the creation of a reform implementation group to implement any future Commonwealth government reforms, which has been done as part of the consultation on shipping reforms, with the three groups formed focusing on taxation, workforce and regulation.

These bills are very wide-ranging for the industry. They will cover the many people currently working in the industry and the people who I certainly hope come to work in the industry in the future. Although there is much noise from the opposition about many of the points in these bills, I would take anyone back to the October 2008 report to actually compare what was recommended then and what is being introduced now. As I have said during my speech, so many of those recommendations have been picked up and addressed. On that note, I commend the bills to the House.