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Thursday, 24 August 1972
Page: 400


Senator COTTON (New South WalesMinister for Civil Aviation) - by leave - As the Minister representing the Minister for Shipping and Transport (Mr Nixon) I would like firstly to congratulate members of the Senate Standing Committee on Industry and Trade and the chairman, our erstwhile colleague Senator Bull, on the splendid and detailed effort they made in preparing this report. As has been mentioned to us the Committee met and interviewed a wide representation of persons concerned in this matter, both on the mainland and in Tasmania. The importance of sea transport to Tasmania needs no emphasis. The island is nearly completely dependent on its sea link with the mainland. There is no competition by alternative modes of transport which could exert pressures for re-allocation of transport resources and thus there is an essentia! need for efficient, economical operation of the existing sea service. Tasmania depends heavily on its export trade, both interstate and overseas. More than half of the State's primary and secondary production is exported and is dependent on transport by sea. In fact, 92 per cent of exports from Tasmania are carried by sea, air cargo - being mainly restricted to high value or perishable commodities - accounting for the remainder. The effects of transport costs on the island economy therefore are of fundamental importance.

As honourable senators will recall, the motion moved by Senator Rae on 3rd September 1970 reflected concern at the then recent announcement of an increase in freight rates by 121 per cent by shipping services to Tasmania. Let me say that 1 fully understand the reasons and sympathise with the concerns of those honourable senators who referred the matter to the Standing Committee, lt was in recognition of this that the Senate resolved that there be referred to the Standing Committee:

The operation of the Australian National Line's shipping services to and from Tasmania with regard to:

(a)   the factors considered in establishing freight rates;

(b)   the appropriateness of the current level of freight rates; and

(c)   any amendments necessary Dr desirable to the governing legislation to enable the operation to be carried out at the lowest possible freight rate.

The terms of reference given to the Committee have been criticised by Senator Marriott as being too broad in scope; he thought that consideration under these terms would take too long for what was essentially needed, namely a quick report of the situation and justification of the freight increases then proposed by the Australian National Line. This may have appeared so at the time. However, the Committee saw the need to widen its investigations and this has been justified by the detail of its comment and recommendations. The ANL service, although the major operator, is not the only shipping line operating to Tasmania. It was felt necessary to include services, costs and the financial position of others in the trade in order to make a valid and objective assessment. Further, sea transport forms only a part of the delivery service. The Committee saw the necessity to look at associated transport costs, namely land leg and wharfage charges. The Committee was satisfied that the additional time taken in giving the proper assessment to all the relevant factors which influence the shipping service was necessary in order to make valid recommendations based on well documented evidence and carefully considered conclusions.

In the wider aspects, the Committee's conclusions are certainly not critical of the ANL role in its Tasmanian shipping services. I have mentioned in previous debates the introduction of roll-on roll-off services with associated improvements in cargo handling techniques. Quicker turn-round times led to more efficient utilisation of available tonnage and a substantial reduction in sea freights. The National Line is continuing its efforts to contain freight rates by re-deployment of its fleet and the phasing out of old and costly tonnage. Faced with mounting costs from wages, repair bills, stores bunkers and the like, the Line is endeavouring to provide against further rises by a more efficient utilisation of its fleet in the respective trades. Honourable senators will recall that in support of Senator Rae when this review was referred to this committee I outlined the history of ANL participation in this trade. Its entry with radical new vessels in 1959 brought about an immediate and substantial reduction of 45 per cent in sea charges. Two years later a further reduction of 15 per cent was made in freight rates from Tasmania to the mainland. As I said then and will repeat, I know of no other industry with such a record of reduction and stability in its charges.

Turning to the specific conclusions made by the Committee, I would first refer to those concerning freight rates. Both the 12i per cent on the Sydney/Tasmania service and the 8 per cent on the Melbourne/Tasmania service introduced in July 1971, were considered fully justified. Because of the fact that the sea leg amounted only to 40-45 per cent of the total charge it was found that increases in sea freights were of lesser significance than would be imagined. Of importance also is the fact that a good deal of the reduction of 45 per cent in sea freights brought about by the introduction of roll-on roll-off vessels in 1959 was absorbed by freight forwarders' changes. Arising from this conclusion, the Committee recommended:

That at the earliest available opportunity - and no later than the re-negotiation of the Australian Coastal Shipping Agreement - the Australian National Line be empowered to act as a freight forwarder if it so chooses.

There are of course many implications involved in this recommendation which would require careful study before the Line could undertake total door to door services. The need for increased land buildings, equipment and personnel to cater for this commercial activity would represent a significant capital outlay. I am advised that the Australian Coastal Shipping Agreement Act is due for renegotiation in 1976 and that the implications of the Line entering into this field will be given due consideration. For my own part, I have noted the remarks made by my colleague Senator O'Byrne. I shall look into whether it is possible to obtain some help from the Trans-Australia Airline and Ansett Transport Industries booking service arrangements. Perhaps this may provide what I might call, in aviation terms, a better load factor for the service. Naturally I shall refer the matter to the Minister for Shipping and Transport. I have asked my adviser to make a note of this. In the proper process of administrative demarcation the Minister for Shipping and Transport can write to me in my capacity as Minister for Civil Aviation and I shall do what I can.

Associated with this recommendation which, in intent gives expression to the Government policy that the National Line should be allowed to compete on terms no less favourable than for other commercial enterprises, is the recommendation that the present tonnage limitation should be revised, honourable senators will be aware of the restrictive effects this limitation has on operations of the ANL, particularly in view of the increasing size of ships engaged in the coastal trades. In 1956 the Commission's coastal fleet was 162,615 gross registered tons, which represented 31.5 per cent of the Australian fleet. The limit of 325,000 tons which was agreed to by signatories to the Agreement allowed ample increase to cater for the then established trades. The ANL coastal tonnage in April this year was 292,924 gross registered tons - including 2 vessels being built - and represented only 27.2 per cent of the Australian fleet. There is thus an obvious need for revision in the limit which was imposed. A decision will depend on the outcome of negotiations which will have to be undertaken with signatories to the Agreement. In its consideration of the matter of subsidy, the majority of the Committee concluded that none of the subsidy schemes considered would be practical or desirable. However, in relation to the conclusion there were reservations by Senator Lillico and Rae for the reasons that they have enumerated. I can appreciate the sentiments expressed as being an endeavour to remove some of the disabilities involved in transport for Tasmania.

The conclusions of the Committee seem to me, however, to be realistic ones. The fact that subsidy was paid to the King Island service between 1965 and this year and to the 'Taroona' prior to the introduction of ANL roll-on roll-off vessels, was recognition of special circumstances for particular purposes and is not considered to have a bearing on this case. Subsidies will not solve the problem but merely transfer the real cost of transport to another sector of the economy. Real costs are reduced by competition, efficiency and the investment of capital for commercial reasons. It would be of doubtful effectiveness if subsidy were to be applied only to the sea leg which is only 40-45 per cent of total charges and administratively impractical if it were to apply only to individual shippers. Since the Committee examined the position there seems no indication that subsidy is more warranted now than it was then. Senator Wreidt has suggested that section 17(4) of the Australian Coastal Shipping Commission Act should allow re-imbursement of losses to the ANL in its Tasmanian services. As honourable senators will know, this section empowers the Minister, in the public interest, to direct the Commission to continue, establish, maintain or operate a particular service. There have been no directions made previously under this section and I do not see that the Tasmanian situation falls within the purpose envisaged by this section.

In agreeing to the recommndation made by the Committee that the Bureau of Transport Economics be asked to attempt a qualitative assessment of Tasmania's transport disabilities relative to other States, the Minister for Snipping and Transport has arranged that this study be undertaken. It is estimated that it will take the Bureau a few more months to complete its task. Currently information is being obtained on transport costs, shipping operations, freight forwarders and the degree of subsidisation, if any, in roads and railways for interstate mainland transport. Its inquiries have encompassed a wide spectrum in attempting to define what Tasmanians see as their transport disability and in assessing the significance of exports and imports to the economy. Its task is made more difficult by the fact that so little information is readily available to quantitatively assess the situation.

The reservation by Senator Lillico at the view expressed in favour of setting up a central port authority to attempt to control Tasmanian ports can be appreciated. This could lead to less efficient administration through lack of direct contact with local port needs and requirements and through the creation of a larger more complicated administrative machinery. On the other hand there would be merit in the proper planning of port facilities on a State basis in recognition of future requirements for the State as a whole. This would avoid a multiplicity of port facilities arising from economic rivalry associated with the growth of country centres. It was estimated by consultants engaged by the Tasmanian Government to determine the mini. mum cost solution for the movement of goods to, from and within Tasmania, that the establishment of a central port would save some $65m to the year 2000 AD compared to development of 4 ports. It is suggested that the Tasmanian Government give a long and hard look at the recommendations made in the Pak Poy report.

Not the least of the problems facing the ANL along with all other shipping operators are those concerned with industrial problems. There is some confusion as to the losses ascribed to the stewards strike in April-May 1971. There is no doubt that the Line suffered. Losses by the ANL in the Tasmanian trade in the year 1970-71 amounted to $800,000. Of this $600,000 was a non-recurring loss arising from loss of revenue, net of operating costs saved whilst the vessels were tied up. Industrial stoppages over which management has little control continually beset Australian shipowners and are of severe influence in the Tasmanian trade. Not only does the company suffer loss of revenue but also its clients, the cargo owner and the passenger are held to ransom and suffer from its effects. We have heard of the instance in which Senator Marriott was involved when a passenger sailing was cancelled. Multiply this a thousand times and add to it the numbers of consignees awaiting urgent cargoes which are not delivered because of industrial stoppages of this nature and we have some idea of the inconvenience and hardships caused by irresponsible actions on the part of maritime unions.

Senator Wriedthas suggested that we would not have men going to sea if it were not for the wages and conditions granted through our arbitration system. I am not concerned as to the arguments of relativity in these respects but rather that, along with these conditions, should be a more responsible attitude and more awareness of the damages that are inflicted and the dangers to sea transport which will result from continued disruptions. The final recommendation by the Committee was that the Government give urgent consideration to a scheme designed to enable shipping operators to finance shipbuilding on a deposit of no more than 20 per cent with the balance payable over 10 years at nominal interest rates. In its consideration of the Tariff Board report the Government endorsed the Board's comments that forms of assistance additional to the high level of building subsidy would be inappropriate and undesirable. This was in response to requests for assistance made by the shipping industry for cheap loans, deferred payments for the purchase of ships, grants to operators and accelerated depreciation rates.

It is my view that the ANL is performing an efficient and economical function in providing shipping sevices to Tasmania. However, it is important that the people of Tasmania are satisfied that they are being fairly treated. With this in mind, the Minister has welcomed representations from Tasmania. I am advised that on 21st August a delegation led by the Tasmanian Chief Secretary and Minister for Transport, Mr Batt, met the Minister in Mel bourne. The delegation presented a detailed submission outlining the problems of Tasmania due to unemployment and shipping. It contained a number of suggestions for improvement of the shipping service which will be carefully examined and replied to in detail. The results of this dialogue and co-operation will, I am sure, resolve many of the problems which have been the real cause of the report we are now discussing.

Question resolved in the affirmative.







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