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Monday, 18 June 2012
Page: 3349

Senator BACK (Western AustraliaDeputy Opposition Whip in the Senate) (11:49): I remain nonplussed as to what we are doing in this place debating this particular legislation since it will in no way achieve the goals that have been set by the minister and the government. Since the Navigation Act 1912, coastal shipping permits have always protected Australian flagged vessels but, unfortunately, they have not been competitive internationally, they have not been viable and they are not viable now. I am pleased to see that there was one point of commonality with Senator Thistlethwaite, and that is that both of us in fact had grandfathers who were union members, in my case, of the Lumpers Union on the Fremantle wharves around the 1920s and 1930s. So I come to this particular argument with the same degree of enthusiasm but from a different perspective because mine is one of trying to encourage new business and trying to grow business.

Other speakers have mentioned the fact that we are a coastal nation and that 99 per cent of our export and import activity comes by sea. The other point to be made is that Asia is the growing region of the world. Europe is now closed. Europe is declining not only in terms of numbers but also economically and we are seeing the biggest shift in the world economy since the industrial revolution to Asia. We also know that to survive and to take our place in the Asian world we have to be internationally competitive with Asian suppliers, and this legislation is simply not going to do that.

We are aware that under the current legislation, as in the past and as will be in the future, Australian registered vessels already have priority in the movement of cargo within our coastal trade. So one must ask the question: why and how is it that we have seen such a decline in the number of coastal vessels under the Australian flag? It is now some 22 and going down. Do we think that these incentives, as they are described in the legislation, are going to do anything to encourage Australian flagged ships to remain so or indeed to encourage overseas shipowners to have their vessels Australian flagged? The answer regrettably is no, they are not. Why? Because countries with which we compete, including Singapore and others, already offer the same sorts of incentives that are contained within this legislation. So, unfortunately, of themselves these are not going to be attractive to the owners of Australian flagged ships and, in particular, incoming overseas shipowners, and I want to go into that in more detail.

We know that if we are going to see an increase in the Australian flagged, owned and controlled coastal shipping industry it has got to be through overseas shipowners coming with their ships into our waters and wanting to have their vessels within our coastal passage trade. What is the particular impact of all this on my state of Western Australia? And, of course, Madam Deputy President Boyce, you would be well aware, as with your state of Queensland, of the importance to this national economy of the resources sector and the primary production sector in our states. Let me quote some figures just to put it into perspective for you. For Western Australia last year, 2010-11, overall production—and this is mainly from iron ore—in the Pilbara region was $57.4 billion of trade. For the offshore petroleum industry, and this is separate to the figures that I have just given you and principally out of the North West Shelf and the Pilbara, it was $23 billion last year and we know that that figure is increasing. If I look at the Goldfields-Esperance region, including gold but also other mineral commodities, I see it was $8½ billion last year. Those are all over vast distances within my state. If I look at the Midwest region based around Geraldton, I see a figure of $2.6 billion. But, with the construction of the Oakajee port and the opening up of the magnetite iron ore industry, the Midwest will be another Pilbara, so that figure of $2.6 billion will pale into insignificance as the magnetite industry gets underway. The only other figure to give you is from the Wheatbelt region. This is based principally on grain but there is also $1¼ billion of iron ore in the Wheatbelt region. That figure is $2.5 billion.

Why is all of this important? Because of the urgent need for us to have an efficient and competitive coastal shipping industry. We know at the moment of the congestion on the roads out of Perth because of the heavy haulage of massive sized equipment. The fact that, because of competition with other users of the road, these loads can only being shipped out of Perth at certain times adds immeasurably to the cost, reducing productivity and inducing delays. The weight of this sort of equipment—often 300 to 400 tonnes—moving on our roads causes damage to the rural road network. You can imagine the challenge associated with getting this equipment over bridges. In fact, it has to be jacked up and moved slowly over those bridges. We in WA, as with those in other states, have got a tremendous incentive to see a rebirth of our coastal shipping trade. Unfortunately, the legislation before the Senate falls far short of allowing us to achieve that.

Out of all this, what do we have? We have poor productivity and we have poor efficiency in the use of resources. So obviously we want to see, and we have the incentive for, so much of this go on to vessels at Fremantle or at Henderson or wherever they are assembled and to go by sea up to the Pilbara ports—or down to the port of Esperance—and to Geraldton et cetera. Unfortunately, we are not going to see it with this legislation because there are no incentives for overseas shipowners to bring their vessels into our waters.

It is my understanding that the legislation falls short particularly with regard to bulk cargoes. We know the circumstance that exists at the moment, that being the single-voyage permits that are available. Under this scheme they will be discontinued. When you have a look at what has occurred in recent times, the difficulty in being able to schedule cargoes further in advance is so obvious to everybody. Inaccurate vessel scheduling, port congestion, last-minute requirements for shipping, weather conditions—we all know the factors that are involved. What we need is legislation that accelerates and facilitates accommodation of the unnecessary or unexpected or unforeseen changes in vessel loadings, schedulings et cetera. The new legislation does not achieve this. It achieves something only on the basis of predicting well into the future what the demands are going to be. Then there is the associated administratively impossible task, from the shipowners', operators' or charterers' point of view, of actually making those changes. It is not obvious to me—and perhaps when the minister speaks he may be able to explain this to us—where the benefit comes of this bureaucracy and this inevitable added cost. I cannot see where it assists anybody.

It is certainly not going to assist an Australian coastal trader. Very often, if the type of vessel that is needed to be used—it might be a vessel for moving heavy haulage, so with a heavy crane, or whatever it is—is not available within our own coastal fleet, then of course an overseas-registered vessel will be necessary. So how it is going to be of benefit to have this long period of congestion and to have this bureaucracy is absolutely beyond me.

I know that the question of fuel—particularly the unavailability of fuel—has been addressed in some of the more recent negotiations. In the consultations that I understand are to come, I hope that matter will be addressed. If not, I hope it will be addressed through a MIM; but, again, we all know the difficulty associated with the on-time delivery of bulk fuel. I recall that, in running a fuel distribution business in Tasmania, more than once the so-called 'just in time' philosophy of delivery of bulk fuel into that state very nearly became 'just too late'. Certainly, trying to predict weeks or months in advance when they would need to schedule those cargoes would be fraught, I believe, with the associated administrative burdens.

I ask: what will the cost impact of this new legislation on customers be? Upon whom will the increased freight rates rest? Upon whom will the inefficiencies rest? And, of course, if there is a substantial move from road to sea transport—and I hope there is, if we can get it right—what will the cost impact on the trucking industry be? How will the trucking industry, drivers, TWU members and others relate? I cannot see how there will be anything other than an increased cost burden which will inevitably be passed on to customers.

The questions that I really want addressed are these. How does this legislation, as it is proposed, increase international competitive­ness? How does it attract overseas shipowners to bring their vessels into our waters and have them Australian flagged? What benefits or advantages are there for them over and above those that they currently enjoy? How does the legislation address the past concerns, existing at this time, which have led us to effectively a decimated coastal shipping fleet of 20 or 22 vessels? I cannot see how this legislation is going to change that situation and make it attractive in the first instance to overseas owners or indeed in the longer term to Australian shipowners.

How will this legislation contain costs? Where are the cost savings to the end customer? We are all aware of the significant cost that is freight in our economy. We know what the impact of the infamous carbon tax is going to be on the cost of freight, particularly in my state, where distances are so vast. I was in Kalgoorlie, Karratha and Geraldton in the last 10 days. At the top of everybody's list in those places remote from the capital city is: what is the impost, the increased cost of freight, caused by the carbon tax going to be? If we see this movement, it will not change it.

I ask: how does this legislation reduce red tape? How does it reduce regulation? This Labor government has increased it and introduced new legislation, new regulations. I think the figures I have seen are that, in the term of the combined Rudd and Gillard governments, there have been some 16,000 new regulations to which business is subjected, with the removal of only 76. I want to know on behalf of the Australian people: in this legislation, where do we see a reduction of red tape? I cannot see it.

I want to know how the temporary licence system, to which I have referred, in any way increases productivity. Australia is absolutely in neutral and probably going backwards in its national productivity at this time—a time when its international competitors are actually increasing their productivity. These are the concerns that we should all be addressing in this place.

I ask about the industrial compact between the unions and employers: can somebody from the other side explain to me how that is going to increase productivity? How is it going to protect jobs in the industry? It has been said that this is not about seeing a diminution of incomes, salaries and wages; it is, however, about protecting and growing employment. And yet the legislation, as I see it, will have the opposite effect.

We see linkage to the International Transport Workers Federation, and I think that is to be applauded. Why, for example, in the legislation, do we not see the wages pegged to ITF levels? ITF internationally has a very, very generous wage system, and that of course is to be applauded. It is my understanding that a Filipino able seaman actually earns a higher salary than a general practitioner does in the Philippines, so ITF levels are obviously appropriate. Let us see legislation in place that ties these wages to ITF levels so that the fear of a wages hike after this legislation comes into existence can be allayed and put to rest.

I concur with those of my colleagues who say that before this legislation is passed, before it is imposed on the Australian people, it should be the subject of a Productivity Commission review. I am of the view that if this legislation is going to further diminish the importance of the Australian flagged industry, as I suspect it will, if this legislation is not going to attract international shipowners to bring their vessels into our waters as Australian flagged vessels, if this legislation is going to drive up the cost of freight to the end customer and is not going to take freight off roads and onto coastal shipping, then it is a waste of everybody's legislative time. It is therefore my point of view that the legislation in its current form should not be passed. It should be referred to the Productivity Commission so that we can get the view of an independent umpire before we proceed further.