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Monday, 1 September 2014
Page: 9344

Mr RAMSEY (Grey) (19:42): A little over two years ago in this place we were debating changes put forward by the previous Labor government to the coastal shipping act. I gave a speech at the time in which I raised a number of issues that I feared would lead to a loss of Australian competitiveness and ultimately jobs. Now, some two years later, it is worth examining what has happened as a result of the changes that the Australian parliament made at that time.

Let me bring to the attention of the parliament a medium sized mining operation based at Kevin, quite near to Penong, which is on the coast and in the far west of my electorate; it is just before the beginning of the Great Australian Bight. Kevin is a gypsum mine owned and operated by GRA. GRA is a joint venture between CSR and Boral. They employ about 60 people directly at the mine and another 40 more indirectly in the rail, trucking and loading of the gypsum at Thevenard, about 80kms away, where the gypsum is loaded on small ships, up to about 25,000-tonne capacity, bound for CSR, Boral and Knauf manufacturing plants based in Brisbane, Sydney and Melbourne. It is an amazing fact that the Kevin mine has, until quite recently, been supplying the gypsum to make about 90 per cent of the nation's plasterboard requirements; it also makes a significant contribution to Australian cement production. Recently, imports have reduced that amount by a moderate portion; but, either way, it is quite an effort, even though few in the country have ever heard of the Kevin mine or have any idea where it is.

GRA are compelled by the Coastal Trading Act to use the Australian shipping if possible. In GRA's case, they have a long-term contract with CSL shipping, which is a subsidiary of Canada Steamship Lines, as the only current operator on the Australian register with a suitable ship. The mandatory use of Australian shipping is presenting new challenges to GRA. Simply put, it is now cheaper to bring product from Thailand—15 days steaming time away from the market—than it is to ship product from Thevenard, which is a mere four days away. GRA is virtually compelled to use CSL's shipping capacity. While technically GRA could apply for a temporary licence to engage overseas flagged vessels, CSL has been granted the ability to block the granting of such a license.

GRA recently went through just that process to access temporary license for shipping. When CSL was unable to meet a contract, CSL objected and the license was not granted. It is worth pondering: CSL prevented the use of an overseas flagged carrier even though they were unable to meet the demand. As freight is such a big part of the final tender process, the sales were lost to Thailand. The Coastal Trading Act did not save Australian jobs; it lost them. In fact, for a voyage from Thevenard to Brisbane under current arrangements, the freight is likely to be the biggest part of the supply cost. Prima facie, the changes have virtually eliminated the possibility of users of Australian coastal shipping contracting international vessels in the event that the local operator cannot accommodate cargo demand.

At first glance, this may seem to make sense that we would use Australian-crewed ships to move product within our borders, but that proposition only makes sense if Australian businesses are able to absorb the costs. In fact, if the businesses cease to operate, then not only do those workers lose their jobs but also so do those who work for the shipping company. In the case of GRA, loss of contracts mean loss of jobs, which in turn dictates that increasing supplies of gypsum come from overseas. It is like cutting off your nose to spite your face.

Further, there is a certain amount of interdependence around the Thevenard port. It is also an essential grains, salt and mineral sands terminal. I can tell you that the grains industry on Eyre Peninsula is the most important industry there. If we were to lose the port at Thevenard, farming on the western 20 per cent of Eyre Peninsula would become uneconomical. Any reduction in total tonnage of the Thevenard port—and GRA is responsible for about 1.5 to two million tonne per annum—threatens the future of essential port upgrades. It is also worth noting that GRA's contribution to coastal shipping represents almost 10 per cent of Australia's total volume. Just for interests sake, that total is about the same as one iron ore port in WA moves in about three weeks. It is not a big shipping program, yet the Coastal Trading Act is causing real harm to local industries.

In summary, GRA has lost about 10 to15 per cent of the Australian markets to imports in recent times. That has already cost five jobs at Kevin mine and there is nothing that GRA can do to fix the problem. They are simply being priced out of the market by a totally uncompetitive freight cost, which is sometimes three to four times higher per day than their competitors encounter when they import from Thailand. If GRA are competitive on freight, they are likely to win the contract. If they are not, they will continue to lose market shares and the end result of that is totally predictable. It is not a pretty picture for my constituents in Ceduna, Thevenard and Penong, where the workers for the Kevin mine come from. Australia should stand up for its workers. If the current laws are not changed in the medium term, it is likely that the 100 workers associated with the GRA mine are likely to lose their jobs. The sheer stupidity of it all means that the sailors on the CSL vessel may lose their jobs as well. It simply does not make any sense. This is not easy reform for this government to make, but we simply cannot ignore the facts in front of us. Either we have to negotiate better operating conditions with our local fleet or we need to find a way of allowing our local businesses to access world-competitive shipping rates. Otherwise, we shall see companies like GRA and their operations at the Kevin Mine near Penong, South Australia, go to the wall and then they will not supply that 90 per cent of Australian gyprock—it will all come from Thailand.