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Monday, 18 June 2012
Page: 3343

Senator SINODINOS (New South Wales) (11:22): May I commend the previous speaker on his address, because it confirmed everything we would expect from Senator Cameron: no vision for the future, nothing positive, just an attack on the other side of politics—play the man, not the ball.

Let me begin by saying that as someone who was born in Newcastle, whose father was a seafarer and a member of the Seamen's Union, in the days when the general-secretary of that union was Eliot V Elliot, I have a long familiarity with the maritime trade and I respect the trade and the seafarers in it, because it is not always the safest or most comfortable of occupations. In the time that my father was a member of the Seamen's Union of Australia, I think he enjoyed the camaraderie on the ships, even though his English was not as good as it should have been. So it is good that there are members of the MUA here. My remarks are not addressed to them in the sense of saying, 'You are the problem; you are the villains.' That is not what this is about. What this country is about is how we bring people together; it is about how we create a sense of positivity and a vision for the future that is as accessible as possible to as many people as possible. The reason I say that is that, while there are elements of this bill that are understandable, in the sense of why we have gone down this road to seek to match some of the tax concessions and other benefits that are offered in the international sea trade, given the peculiar conditions that do apply in that trade, we do have to understand—and this is one of the obligations that we have as legislators—and acknowledge that whenever we make decisions, or confer 'benefits' in one sector, we have to make sure that those benefits are not at the cost of other sectors and that therefore the overall benefit to the national economy is not in fact a negative.

In saying that, I recognise, as I said before, the peculiar nature of the world's shipping industry. It is a very competitive industry. It is subject to a lot of volatility—there are times when shipping is in surplus, and that drives down rates and puts added competitive pressures on people, and they therefore seek to undercut each other; there are other times when there is a deficit of shipping and rates tend to go up. In recent times we have had pressure on rates to go up, as people realised they could not keep undercutting each other. So we recognise that volatility and we also recognise the nature of the international flags of convenience and all the other arrangements that operate in international shipping that create a capacity for shipowners to pay less tax in certain jurisdictions. That puts more pressure on other jurisdictions, such as ours, where we have, if you like, more of a First World tax regime.

I also recognise that around the world, starting with the US and the Jones act, there are a lot of First World countries that do restrict shipping with policies of cabotage, and that, in the context of international trade negotiations that are going on at the moment, there is not much progress being made on issues like removing cabotage—because, ultimately, if we are to have free trade and investment, that means all countries must take off their restrictions. So I recognise that we are playing on a very unlevel playing field.

But, in that context, we have before us a set of bills that do seek to create some very special conditions in the maritime industry. It would be fantastic if we could extend these conditions in Australia so that, in any industry in Australia where there was some potential competition and where there was some benefit conferred by foreign governĀ­ments, we would seek as a government to match that. But in a sense, looking at this from the national economy perspective, we cannot do that; so we have to look at the costs and benefits of what we do in one sector and the impact that has on other sectors.

In looking at the costs and benefits of this legislation, we therefore have to take—and this is why my colleague Senator Joyce was supporting a Productivity Commission inquiry—an economy-wide view of how this sort of legislation would work. We have to take into account the impact of any increased red tape or regulation. We have to take into account the potential impact of increased costs for shippers and users of imported products and the like. We have to take into account, in other words, what the economists like to call the general equilibrium effects of doing things in one sector as they cross over into other sectors.

One other point I would like to make is that in relation to anything that involves international trade there is a lot of literature around, but often there are benefits in moving unilaterally on trade restrictions. Often we keep restrictions back as bargaining chips in international trade negotiations, and we can certainly do that with cabotage. But my point is this: there are also a lot of benefits to be gained from unilaterally moving to take advantage of cheap foreign goods and services that are potentially available, including in the shipping area, if they have benefits for the broader economy. But, as I said before, today is not the day to go into that. My point is simply that I support what Senator Joyce has said in relation to a Productivity Commission inquiry. That is a canvas on which we can look at the costs and benefits of going down this route as a whole.

Let me—as someone who was also involved in the events of 1998 around the wharves—paint the context of that. That was a context where our cranage rates were seen as being very low, by international standards, for a First World country. The issue was that, during the Hawke-Keating era, despite various attempts to address that, we had not made sufficient progress. That is why there had to be some sort of breakthrough and, in concert with the industry, there was an attempt by the Howard government to break through on the wharves—yes, some of it was not particularly pretty, but it was a situation that seemed to have gone beyond the point of dialogue and something needed to be done to cut through, and reforms were made. But since then there has been slippage on those reforms. As John Howard once said, reform is one of those ever-receding finish lines: we need continuing reform. This package will aid the industry in a very short term sense. But, unless the productivity compact that the MUA and others are talking about delivers real, enduring, sustainable productivity change, we will not have the shipping industry we deserve. Make no mistake, with our freight task set to double and even treble by 2020 along the eastern seaboard, coastal shipping must play a bigger role. There is an opportunity there. The industry and the union have to be more entrepreneurial and more willing to take risks to get rid of some of the work practices of the past in order to do this. Some people may say, 'We'll never match the wage rates or costs of some jurisdictions overseas.' I think that is defeatist. Why can't we look at greater productivity and innovation? Why can't everything be on the table that potentially restricts our capacity to do better? We are great innovators in Australia. We have a capacity to do that in this sector as well. I am very concerned that we do not have a situation where the government gives away these benefits, in good faith saying that these are being put on the table, and in return the productivity compact does not deliver the change that we are looking for. This is not about reducing wages. That is unsustainable. We all know that. If we reduce wages in one sector that just encourages people to leave that sector and go somewhere else. That does not actually build up an industry. What builds up an industry is when you create incentives for greater productivity and wages go up off the back of that. That is what we are about. That is positivity. That is about being optimistic about the industry of the future.

I suppose what I am saying is that in seeking to refer this matter to the Productivity Commission we also want to give time to see what will happen as a result of the productivity compact that the industry is putting together with the MUA and other stakeholders. We strongly support that process going forward because of all the evidence we have received from people within the industry. It is easy for someone like Senator Cameron to deride people in the industry and say that they have a vested interest. Of course they have got a vested interest. Their livelihoods are at stake as well. They want to know that they will be able to ship.

We have had evidence from people within the industry that they are concerned about the potential impact of costs on them. So we need someone who is impartial, a third party, to weigh up that evidence. That is not to cast aspersions on the public servants who have put together the regulatory impact statement; but, by definition, they say that they were unable to take into account actual numbers around what the productivity compact could do, because they had to take at face value that there will be a productivity compact and assume that it would have the benefits and the positive effects that the government says it will. So we need a rigorous process to look at this.

In that regard I have come across a number of comments from various people within the industry. Wallenius Wilhelmsen Logistics announced on 30 May that they could not commit to engaging the coastal shipping after 1 July, when the legislation takes effect. They stated:

Based on these proposed changes and new requirements it may become very difficult for WWL to continue participating in the coastal trade.

On 12 June, online marine publication Lloyd's List published an article entitled 'Coastal shipping reforms create contrary and adverse outcomes' highlights concerns with the shipping reform package. It states:

Minister ... Albanese’s new licensing regime, designed to promote Australian participation in coastal shipping, appears to be in the process of creating unintended consequences and adverse results.

Maritime executives argue that the system as a whole could also work to the disadvantage of domestic carriers. Shippers may end up moving large, heavy or unwieldy cargo by road rather than by ship. And Australian cargo shippers look likely to be put at a disadvantage as carriers reduce service offerings. Break bulk carriers, especially tramp operators, envisage that the requirements for being granted a one-year temporary licence, which involves notifying bureaucrats of an intended minimum of five voyages in advance, will likely result in them being unable to offer a service.

Shipping Australia in its submission to the House committee inquiry states:

The overall effectiveness of the Bills taken as a whole is, in our view, dependent on the productivity improvements that will arise from the proposed compact between the unions and employers.

That is why, as I say, it would be good to have time for the Productivity Commission to go through that process. I recognise in any negotiation that it is useful to be able to say, 'The government have delivered on their end; therefore, it is now up to us as unions and employers to get together.' My point is simply this: there needs to be an objective process to make sure that what is being put on the table as genuine cost reductions, productivity improvements and innovations will deliver the sorts of benefits that the government's own regulatory impact statement is suggesting should come forward out of this particular shipping industry reform program.

I go back to an issue raised by Senator Cameron in his contribution about the low road versus the high road on productivity, and that is: whatever changes the coalition may ultimately make to industrial relations policy, shifting the balance more towards the centre, the point is that they are all aimed at promoting productivity. If you go back and look at the record of the Howard governĀ­ment, including in the period of the dreaded Work Choices—the industrial relations policy that dare not speak its name—real wages were going up, productivity was going up and the economy was going strongly ahead. It is possible to achieve that sort of win-win situation. Too often this government has taken the view that it has to intervene to protect people. The best way to protect people is to educate them and to help make them strong and dependent on their own capacity to find their way in the world. There is no way you can do this simply by the government always acting as the referee because in the long run you can never create really independent, capable people if they are always dependent on government propping them up. I fear that this is a sector where for too long governments have intervened in various ways and the results have not been what they should have been.

In summary, I support Senator Joyce's comments and the comments of all of my colleagues, including Senator Colbeck, who spoke about the particular issues in Tasmania. On both sides of the house there is a commitment to having an internationally viable shipping industry and, as I said before, we recognise the unlevel playing field that has developed in this particular sector. But it is not a reason why we should necessarily put forward ideas in this sector which perhaps provide an advantage to this sector over other sectors and may not be providing a national net benefit. On that point, I finish my remarks.