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Monday, 28 May 2012
Page: 5716


Mr KELVIN THOMSON (Wills) (15:47): I rise to speak on the Shipping Reform (Tax Incentives) Bill 2012 and associated bills in support of the Australian government's Stronger Shipping for a Stronger Economy legislative package. The government's Stronger Shipping for a Stronger Economy legislative package delivers on the government's 2010 election commitment to revitalise Australia's shipping industry. In the past decade the Australian fleet has gone from 55 ships to 21 ships, with only four operating on international routes. In a country where 99.9 per cent of our trade is moved by ships, there will soon be no fleet to revitalise. We need to act now or we will not have an industry left at all.

The taxation elements of this reform package are aimed at revitalising the industry by making it more globally competitive and attractive to investors by providing a zero tax rate for Australian shipping companies, provisions for accelerated depreciation of vessels via a cap of 10 years on the effective life of those vessels, rollover relief from income tax on the sale of a vessel, an employer refundable tax offset in relation to seafarers, and an exemption from royalty withholding tax for payments made for the lease of shipping vessels. The objective of the coastal trading bills is to provide transitional arrangements and promote a viable shipping industry that contributes to the broader Australian economy, to facilitate the long-term growth of the Australian shipping industry and to enhance the efficiency and reliability of Australian shipping as part of the national transport system.

Within the context of these shipping reform bills, I would like to express some concern over the recent decision in the Federal Court relating to the Allseas Construction SA v Minister for Immigration and Citizenship case. That decision determined that workers on pipe-laying vessels operating in the Australian exclusive economic zone do not have to obtain immigration visas or permits. The conclusion of the court was that the Migration Act is concerned with the entry into Australia of persons on board resource installations rather than with the entry of the vessels per se. This is reflected in the act, which provides that any person on board a resources installation shall be deemed to have entered Australia at the time at which the installation is attached to the Australian seabed. But the workers on the Lorelay and Solitaire are not on board the pipeline; they are on board the vessels, which are not resources installations and therefore not part of the migration zone.

Essentially, what the shipping company has succeeded in doing is taking advantage of the Howard government legislation which excised offshore areas from Australia's legal jurisdiction. The consequence is that vessel operators could utilise foreign personnel on many, if not all, of the vessels operating in the oil and gas sector. This is a very serious threat and it seems to me that additional amendments to the proposed Shipping Registration Amendment (Australian International Shipping Register) Bill 2012—either in this suite of bills or further on down the road—may be necessary to address the ramifications of this Federal Court decision.

The bill provides for the establishment of a new Australian International Shipping Register, its operation, administration and seafarer employment conditions. The objectives of the Australian International Shipping Register are to facilitate Australian participation in international trade, provide an internationally competitive register to facilitate the long-term growth of the Australian shipping industry and promote the enhancement and viability of the Australian maritime skills base and the Australian shipping industry.

Australia's rapidly expanding commodity trade is driving an increase in the shipping task. Our sea transport task is now the fourth largest in the world. Over the last 20 years the Australian maritime industry has undergone a radical transformation. The home-grown, Australian owned industry has changed into an industry featuring a large proportion of foreign based maritime players. Reflecting the globalisation in many other sectors of the economy, the Australian maritime industry is now largely foreign owned. Australian involvement in our international trades is miniscule and foreign groups are in control of the remaining Australian manned vessels. The creation of this register will enable Australian shipping companies to compete on a level playing field internationally by removing the cost disadvantages experienced by Australian registered ships when competing in the global market.

Key elements of the register are mixed manning; international registered vessels must employ a minimum of two Australian crew, preferably the master and the chief engineer; international employment terms and conditions including workers compensation, internationally competitive pay rates and conditions, consistent with the Maritime Labour Convention and other international labour treaties; access to tax exemption and other tax incentives; the same environmental safety and O&HS standards will apply to AISR vessels as apply to first register vessels; and that a seafarers bargaining unit must be formed for the purposes of negotiating terms and conditions for seafarers on international voyages; and provision that those collective agreements must form part of and cannot be limited by seafarers' individual work agreements.

These reforms have been through a long and thorough process of consultation and review. Over the last four years there has been extensive consultation including a bipartisan parliamentary inquiry, which made unanimous recommendations in favour of reform. There has also been a discussion paper, three industry roundtables and two exposure drafts of the proposed legislation have been released for comment.

One of the objectives stated in the bill is that the Australian International Shipping Register aims to promote the enhancement of the Australian maritime skills base. The special provisions in the bill relating to the Australian International Shipping Register will require that there must be two Australian nationals or residents in senior officer positions on the ship. There is, however, no requirement that the vessels carry any trainees. I believe that an additional condition should be added, inserting a training obligation similar to the training obligations on vessels under the general register. This trainee requirement should specify officer trainees as a condition of the Australian International Shipping Register, as Australia's maritime skills shortages are greatest in the area of officers, marine engineer officers and deck officers.

Under the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012 there is an obligation to register Australian owned ships. However, foreign owned ships are not required to register in Australia. The recent Federal Court decision shows that foreign flag vessels operating in Australia's exclusive economic zone are beyond many of Australia's laws. These vessels could exploit the Allseas decision of the Federal Court, to which I referred earlier in my remarks.

I understand that some operators of vessels in the offshore oil and gas sector already take the view that they can use foreign workers on these foreign flag vessels without any requirement to obtain anything more than a holiday visa or transfer through an Australian airport. That is to say, that they can work without even having a subclass 457 visa. We should seriously consider the idea that vessels which operate in Australia's exclusive economic zone for periods greater than 30 days should be required to register with the Australian general registry under the shipping registration bill. That is not unlike motor vehicles in Australia, which can be registered in one state but which are not required to register in another state if they are passing through or are there for a holiday. But if they go there for an extensive period and the owners of the motor vehicles are relocating to another state it is expected that they register in the new state. We could achieve this by inserting a new section for foreign ships operating continuously in Australian waters. This amendment would not apply to ships transiting Australian waters either on international trading voyages or on innocent passage.

A large number of foreign vessels are operating in Australian waters which are not engaged in international trading voyages nor engaged in interstate trading voyages. The clearest example of this category of vessels is the offshore oil and gas industry fleet. In this booming sector a large majority of vessels are already foreign flag vessels. At any time there are up to 200 vessels servicing the offshore oil and gas industry in Australia's exclusive economic zone. The majority of these vessels—over two-thirds, according to the Australian Institute of Marine and Power Engineers—are foreign flag vessels. These vessels spend the majority of their time in Australia's exclusive economic zone. Indeed, some of them have spent years in Australian waters.

The Australian Institute of Marine and Power Engineers has made a number of submissions to the federal government over the last five years urging reregulation of the Australian maritime industry. I note some people will call this protectionist, but that is too bad. We should be about ensuring that Australian standards are maintained within the Australian economy. It gets down to the simple proposition that, whilst operating in Australia, foreign companies should comply with Australian laws. Current legal structures applying to the Australian maritime industry do not deliver this objective. In the maritime industry the concept of the flag of a vessel is a barrier to the effective application of Australian law. Foreign flag vessels can avoid some of the laws that apply to Australian flag vessels. That is why the Australian Institute of Marine and Power Engineers continues to object to foreign flag ships operating continually in Australia's exclusive economic zone. That is why the Australian Institute of Marine and Power Engineers has called for all vessels operating continuously in Australia's exclusive economic zone to be required to be Australian flagged.

I strongly support the bills before the House. I share the concerns of the Institute of Marine and Power Engineers. I support their recommendations to strengthen these laws to cover foreign operators who may now be exploiting a loophole, created by the Howard government's 2005 exclusion zone legislation.

I also want to make some comments in support of those of the member for Reid, John Murphy, which he made on 9 May, about standards of training for Australian marine engineers. The member for Reid is a very courageous MP, who is not afraid to say what he thinks. I always find he has something of consequence to say. He pointed out to the House concerns that had been raised with him and, indeed, these concerns have been raised with me about the reduction of standards that have been proposed in draft Marine Orders Part 3, circulated in late 2011. One effect of the proposed changes is that the training time for marine engineers will be reduced from the current 36 months to 12 months—that is, from three years to one year. There are serious concerns that this period is inadequate to produce a highly skilled technical officer with the understanding and expertise to deal with the complex systems of modern vessels. He referred to another concern regarding draft Marine Orders Part 3:

… entry into the marine engineering training courses would be open to persons who do not possess the prerequisites currently required for new entrants. These prerequisites are either HSC-level passes in English, mathematics and physics or relevant trade qualifications. In the area of theoretical knowledge, of particular importance to marine engineers are, of course, the subjects of mathematics and science, including electrotechnology and perhaps steam propulsion systems.

The third concern that he noted related to the proposed deletion of the current mandatory requirement to demonstrate practical proficiency by successfully completing an oral examination, conducted by a qualified examiner of marine engineers. He said:

Deletion of the oral examination would be a retrograde step, as it could allow a reduction of the training process to end in the granting of a certificate of competency to a person who may not actually be competent as a marine engineer in any practical sense. Therefore, there should be no weakening of the current regulation that a certificate will not be issued until the applicant has passed an oral examination conducted by an AMSA examiner.

I want to place on record my support for those remarks.

Finally, I note that the opposition are opposing these bills, and I am really disappointed—although, in some respects, not surprised about their doing this. When the House inquiry reported on these bills, the member for Hinkler stated:

… the Liberal and National parties are keen to support the Australian shipping industry. It must play an increasing role in our domestic freight task.

Yet they oppose these bills—bills which will significantly reduce the cost of Australian shipping. These bills do not provide a subsidy to Australian shipping. They do not close the coast to foreign ships. What these bills do is reduce the costs for Australian ships to operate and in turn increase their competitiveness against foreign ships. They go a long way towards creating a level playing field for Australian ships to compete against foreign ships.

The opposition seem to be determined to oppose the chance for Australian ships with Australian workers competing on a level playing field against foreign ships to carry Australian goods on the Australian coast. The opposition would appear to be in favour of flag of convenience ships with crews from Third World countries carrying Australian goods through some of our most treasured marine environments. If this is standing up for Australian jobs and being proud to be Australian, it sure is a funny way to show it! I commend the bills to the House.