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Monday, 18 June 2012
Page: 3352


Senator BUSHBY (TasmaniaDeputy Opposition Whip in the Senate) (12:06): I rise also today to speak on the Coastal Trading (Revitalising Australian Shipping) Bill 2012 and associated bills. The coalition recognises that the coastal shipping trade plays a vital role in Australia's freight task. For a variety of reasons, most related to the lack of cost competitiveness of Australian shipping, the number of Australian-registered vessels has declined over the last few years, and there are only 22 Australian flagged ships operating today. The coalition is supportive of constructive measures to increase the number of Australian vessels internationally and the number used for coastal shipping. However, these bills carry a number of Labor trademarks that make it impossible to support the proposed measures.

As we on this side have come to expect from Labor, these bills have been poorly drafted, with minimal or no consultation with key stakeholders and, where consultation has occurred, with a lack of regard for the advice that has been put forward. These bills have a short implementation frame and they defy common sense. They will serve only to increase red tape and the regulatory burden for industry and the cost of freight. We are not convinced that the five bills that comprise the shipping reform package will stimulate growth in the number of Australian ships on our coast or maximise the use of Australian flagged vessels.

One of the primary concerns amongst witnesses to the Economics Legislation Committee's inquiry into these bills was the lack of consultation with key stakeholders in relation to the impacts they will have on industry. The first draft of the Coastal Trading (Revitalising Australian Shipping) Bill was released for public comment just before Christmas last year; however, a major redraft was required, and a second version of the bill was released in February, together with the other bills comprising the package. This meant that consultation was undertaken for only a few weeks. Shortly thereafter, the minister introduced the package to the parliament—on 22 March 2012. The package that was introduced included new provisions that had not been contemplated in the initial consultation process. Despite this, Labor did not even see fit to complete another regulatory impact statement with department officials at the Senate inquiry. It was adamant that none of the many alterations arising from the redraft would impact the original RIS, but the evidence, both at the hearing and from the submissions, suggested otherwise.

The bills were referred to the House of Reps Standing Committee on Infrastructure and Communications and the Senate Economics Legislation Committee for consideration, but the House committee was given an extremely limited time frame to examine the bills and the Senate report, only tabled late last week, means that the House did not benefit from the Senate's advice prior to voting on the bills. A number of witnesses to the inquiry put on the public record their disappointment with this lack of consultation. Many witnesses said that they raised their issues and concerns directly with the department and the minister's officers, only to receive stony silence in response. Ms Margie Thompson, a member of the Australian Dry Bulk Shipping Users Group, which collectively accounts for 60 per cent of the coastal shipping task, told the committee that when her group tried to raise their concerns—and their concerns, certainly on their face, seem valid and substantial—they were simply told that the minister had set the policy direction and the department was trying to work the legislation around that. Apparently the minister knows better than Australia's primary users of coastal shipping! It is extraordinary to think that Labor would shut the door on the biggest users of coastal shipping in this country when devising a package of bills that will have such a dramatic impact on the industry. It is valid to ask: what is the purpose of the shipping industry? It is a service industry; it is not an industry that is there for itself; it is there to move freight and to do so as efficiently as possible. Efficiency and timeliness in moving freight have to be the primary concerns when looking at legislation that impacts on coastal shipping. Sure, there are other considerations, but ultimately the industry exists for the reason of moving freight, and that has to be the primary concern.

The lack of consultation is a common characteristic of this government and it is not the first time that the Senate Economics Legislation Committee has heard from witnesses about such concerns. 'The minister knows best' appears to be this government's default response when drafting legislation—until the eleventh hour, when we so often see those opposite scrambling to amend the unworkable as a consequence of their inability to listen to stakeholders and take on board the valid objections and concerns that were raised with them early in the process.

Another major issue raised by witnesses to this inquiry is that the bills are unlikely to meet their objective. To give some perspective on the issue, let me outline the size of the coastal shipping industry. The current market supports 17 Australian vessels that move Australian product around the coast—which is about 70 per cent of the total coastal trading market. Foreign vessels make up the remaining 30 per cent of the market, which is around eight ships. So we are talking about measures designed to foster a greater degree of Australian shipping activity in a market that already has 70 per cent. If it were possible to convert the remaining 30 per cent into Australian flagged vessels, that would work out to around a further eight ships. That is what we are talking about. We are dealing with a very small industry in terms of coastal trading task, which, in the most wildly optimistic of predictions, could only expect to 'revitalise' the industry to the extent of an additional half a dozen to eight vessels.

It is also of particular concern to me that, when I asked officials from the department of infrastructure and transport at the economics committee inquiry about the effectiveness of the bills, they were reluctant to commit to any guarantees that the bills would actually revitalise Australia's coastal shipping industry. Department officials said it was difficult for them to assess exactly how many vessels would be added to the Australian register or how many companies would take up the incentives to boost the numbers of Australian flagged vessels. Officials would only say that in their opinion this suite of bills 'provide an investment platform and strong regulatory basis for access to the coast'. This is hardly a satisfactory justification for the implementation of a rushed and sweeping reform package, and I am not the only one who thinks that—even the Labor senators in attendance at the inquiry were questioning the effectiveness and necessity of these bills. I am also disappointed that Hansard does not pick up pauses, because the long pause from department officials in response to my question, 'Are you confident that it'—that is, the number of Australian flagged vessels—'will increase?' would be better described as a deafening silence. That question was finally answered with a repetition of the default position of the department that the package will provide a 'strong investment platform'. In the absence of department officials jumping up and down and telling me how wonderful this reform package is, I can only take it to mean that, no, they are not confident that this suite of bills will increase investment in Australian coastal shipping.

These bills will also increase red tape and the regulatory burden for both users of coastal shipping and industry participants. The bills abolish part VI of the Navigation Act 1912 and, in doing so, abolish the current permit and licensing system. Many companies have identified deficiencies in the temporary licence system established under the proposed act. The proposed scheme will require users seeking a temporary licence to carry out a minimum of five voyages per year, the details of which must be provided at the commencement of each year. According to the explanatory memorandum to the Coastal Trading Bill, a temporary licence will be issued for 'only those voyages where the required information is known, including expected loading and discharge ports and cargo type and volume'. This is a significant variation from our current situation under which two voyages a year are determined as being incidental and not requiring a licence. Of course, this determination was made by our current Prime Minister when she was 'minister for fair work'. How can the government possibly expect industry to provide such detailed information for an entire 12-month period in advance? The answer is that it cannot. Many submitters and witnesses to both the House and Senate inquiries said that it is simply impossible to forecast the movement of such cargoes over a 12-month period.

At the inquiry, Caltex argued that the minimum voyage requirement is not practical or reasonable and even went so far as to suggest that this could reduce transparency within the industry, because it would encourage shippers to include bogus voyages in their applications to meet the licensing requirements. But, as we all know, transparency is not of importance to this Labor government. Caltex and BP submitted to the inquiry that the changes to the licensing regime will also jeopardise Australia's fuel supply security by eliminating the flexibility to divert supply to meet emergency demand. It is incredible to think that, under these proposed bills, a fuel carrier could be forced to remain stationary for up to two days whilst bureaucrats decide whether it is permitted to change course to meet emergency supply of shortages to aviation fuel or petrol supplies.

Fuel companies have also highlighted that the proposed changes to licensing, which will see legs of journeys up for 'bid', will create safety risks in the transportation of flammable and dangerous goods. Sucrogen, a producer of sugar and molasses, also raised concerns in relation to the changes to the licensing regime because they could prevent it and other companies in Australia carrying their own cargo on their own ships. The transport of molasses, a product whose end use often results in consumption by humans, requires strict quality control and specific requirements. Sucrogen is currently able to ensure this quality control by using its own internationally flagged vessel, which it uses on the coastal trade, but may not be able to continue this practice under the proposed legislation. Not only does this defy all logic and common sense but also it could force such companies to cease coastal trading and instead export their goods to avoid this requirement. For example, instead of sending its molasses from Queensland to Victoria for processing, Sucrogen's evidence was that it might well find that, depending on how far around the coast it went, it would be marginal to continue the process of sending the molasses to other Australian areas for processing. It might become cheaper to send molasses overseas to be processed and to bring sugar directly from overseas into Australia—so there goes Australian industry and Australian downstream processing. The coastal shipping task would also be lowered, which is counterproductive to the overall purpose of these bills. The changes to the temporary licensing requirements can only be described as illogical and protectionist.

In addition to a significant increase in the regulatory burden, a number of submitters raised concerns about increased costs for coastal shipping and resultant job losses across manufacturing and industry. At a time when manufacturing and industry are struggling with a two-speed economy, a high Australian dollar and weak global demand and are facing the carbon tax, this Labor government wants to place further costs on the way manufacturing and industry transport their goods around Australia. The Australian Dry Bulk Shipping Users Group, who, as I have mentioned, carry 60 per cent of the current coastal shipping task, are so concerned by the impact these bills will have on their transport costs that they commissioned an independent report by Deloitte Access Economics, which confirmed that these bills would result in an increase to transport costs of at least 16 per cent. Shipping costs currently are around 30 per cent of the group's outgoings; now, just in time for the implementation of the carbon tax, this government is going to introduce legislation that will increase those costs further.

Already we have seen one global shipping operator announce its intentions to exit the coastal shipping market in Australia, with WWL announcing in May that it could not commit to engaging in coastal shipping after 1 July 2012. Like so many pieces of legislation, Labor is attempting to rush through the coastal shipping reform package without adequate consultation or consideration of the impact it will have on industry.

If we really want to work out how to revitalise coastal shipping in Australia and increase the number of Australian flagged vessels the logical path is to commission a Productivity Commission inquiry. Such an inquiry would investigate and address stakeholders' concerns and determine what impact these complex proposed regulatory changes would have on the Australian coastal shipping industry, the cost of freight and the cost to coastal shipping customers. It would also determine how best to proceed to ensure that we get an efficient and cost-competitive shipping industry based out of Australian which fosters increased activity. These bills should be rejected and the issue of the future of Australian flagged shipping should be sent to the Productivity Commission for further consideration.