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Wednesday, 10 November 1971
Page: 3261


Mr HAMER (Isaacs) - Australia is one of the great overseas trading nations of the world - in fact, the twelfth biggest. Yet of all the great trading nations we carry the lowest proportion of our trade in ships of our own flag. This has many consequences, not the least of which is something like S700m a year in overseas exchange for freight. The world trading pattern is moving towards bilateral shipping. For instance, Australian-Japanese trade will be increasingly serviced by Japanese and Australian vessels with no cross-traders permitted. If Australia cannot provide enough shipping to take up its share, Japan will take up the slack.

What would we have to do to increase the size of the Australian merchant shipping fleet? We already subsidise the construction of ships in Australia but only to match foreign ship building costs. We do not provide any of the other incentives which encourage foreign ship owners who carry the bulk of our present overseas trade. It is worth looking at what these incentives are. Most overseas countries encourage ship building by offering attractive loan finance. Generally, finance is available overseas at between 6i per cent and 8 per cent over 8 years. This, together with a reasonable depreciation allowance, permits owners to write off their investment in a practical period. The present Australian depreciation period is 16 years for bulk carriers and tankers and 20 years for other vessels. But today no vessels are built for a life of 20 years. Cellular vessels are built for a life of 10 to 12 years by Japanese owners and 12 to 15 years by British owners. A similar financing system should operate for Australian owners.

I have spoken several times in this House about the importance to industry of restoring the 20 per cent investment tax allowance. It would be particularly valuable in the shipbuilding industry, because ships are long term construction projects, and the tax allowance would provide a very valuable cash flow early in the life of the ship. One of the objections raised to an expansion of Australian shipping is the question of high labour costs. Labour costs are not nearly as important now as they used to be. It is true that there is some feather bedding. A 24,000 ton cellular vessel on European scales requires 28 men, compared with 35 men under Australian conditions. But, nevertheless, the capital cost of the ship and the other running costs are far more significant financially than the crew costs.

Industrial turbulence is another cause of concern. So far the Australian National Line's overseas vessels have been relatively strike-free since they began operating. But there is a need for rationalisation among seagoing unions to reduce costs in shipbuilding, ship operation and industrial negotiations. Good industrial relations in the shipping field, as in so many of our other industrial activities, are critical to our future. We must also do something about shipping conferences. Our seaborne trade is almost wholly in the hand of crosstraders and other national shipping lines, and our exporters are sometimes held to ransom. Without a viable merchant fleet we are quite unable to influence rates of freight, ports of call, types of cargo carried or conference attitudes.

The new Restrictive Trade Practices Act should give the Government powers similar to those vested in the United States Federal Maritime Commission, which controls conferences, approves freight rates and ensures that monopolies and cartels cannot operate to the detriment of American seaborne trade. We also need some degree of unity among shippers, perhaps through the Australian Shippers Council. I envisage a situation where we have open shipping conferences with rate agreements registered with the Government, Australian vessel participation in all conferences to check on costs, and the Australian Government acting in a supervisory capacity in a similar way to the United States Federal Maritime Commission. If we take these steps we will build up a fleet of merchant ships which will properly represent our status as a major maritime and trading nation and be to the great benefit of our exporters and our balance of payments.







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