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Monday, 4 May 1987
Page: 2523

Mr ROBERT BROWN(5.35) —I am pleased to see that there is no significant opposition by members of the Opposition who have spoken on the Ships (Capital Grants) Bill 1987. This simply repeats the experience that we had with the last piece of legislation that the Minister for Transport (Mr Peter Morris) introduced in connection with the Australian National Railways. There was a bipartisan attitude towards that legislation as well.

Mr Hollis —They can't find anything to criticise.

Mr ROBERT BROWN —As my colleague the honourable member for Throsby indicates, it has been very difficult for them to find anything to criticise. The honourable member for Mitchell (Mr Cadman), who preceded me in this debate, found it very difficult to criticise things, so he looked for issues such as whether seamen returning home from an engagement are allowed to travel home first class, whether the Minister was correct in referring to this as a package proposal and whether the fringe benefits tax applies to the maritime industry. Really those matters are of very minor substance. There has been general agreement between the Opposition and the Government in relation to this. That reflects very well, of course, on the Minister and the people with whom the Minister works in preparing policy for the Department of Transport.

Mr Hollis —And the Caucus committee.

Mr ROBERT BROWN —And, as the honourable member for Throsby reminds me, the Caucus committee as well, a committee which I understand has worked in conjunction with the Minister very effectively and very successfully. The purpose of the legislation, as has been indicated by other speakers, is to give effect to the shipping industry package. I use that word `package', despite the fact that exception was taken to it by the honourable member for Mitchell. The industry package was announced by the Minister last December. This legislation deals with the capital assistance measures of that package.

We need to keep in mind the fact that we are dealing with industry restructuring in an area which has been traditionally very difficult. This simply continues the approach of this Government to the whole question of effective restructuring of Australian industry. The Government has also given attention to the steel industry, with the steel industry plan. The honourable member for Throsby is very aware of that, particularly because of its importance to his electorate and his constituents. We have had the motor vehicle plan; the clothing, textile and footwear plan; the shipbuilding plan; and the heavy engineering plan. Now we have another one. It is in the spirit of that approach of the Government. The contribution being made by the Minister for Transport and his Department is very important in this regard. In the Minister's second reading speech he said:

In today's tough economic climate we can no longer rely solely on traditional exports to keep our economy buoyant.

He went on to say:

If we are to enjoy future prosperity we must look to expanding our trade in services, such as exports of efficient Australian shipping services.

I will say more about that later when I draw attention to the financial significance and the foreign exchange earning significance of that point, but I endorse it absolutely. The Minister's perception is such that the question of maritime services for Australian industry and Australian overseas trade is not just a matter of shipping commodities from one place to another but has other important elements as well.

This package is based on the recommendations of the Maritime Industry Development Committee which was established by the Minister to consider all aspects of a report of a study by the Australian shipping industry into developments in manpower and training of seagoing personnel which had been initiated by the Minister. The report of the MIDC was called `Moving Ahead', and it is the outcome of that review. The MIDC is a tripartite committee of Australian ship operators, seagoing unions and the Federal Government. This industry development package is based on the recommendations of its report. It is a major element in the Government's long term strategy of developing an efficient Australian merchant fleet.

The plan itself represents a new approach on Australian ships and is a sound basis for the development of Australian shipping in the future. The implementation of this plan has been set by the MIDC in a three-point package. First of all, the unions have agreed to changes which will improve efficiency. In particular in that regard, I would like to draw attention to a matter that has been referred to by others; that is, the introduction of multi-skilled ratings to Australian trading ships-ratings who will work both in the engine room and on deck. This integrated approach to ship crewing introduces into the Australian shipping industry the general purpose crew concept which has been developed by leading maritime nations. Secondly, ship operators have undertaken to invest, whenever commercially feasible, in the high technology ships that will introduce the new crewing arrangements. Thirdly, the industry has called on the Government to provide financial incentives in order to encourage this investment. Those financial incentives represent, as has been indicated, a 7 per cent grant on the purchase price of eligible new or second hand trading ships or, in certain circumstances, 7 per cent of the modification cost of an existing trading ship. Grants will be available only to ships which are crewed with Australian residents, at a level no more than that specified for the appropriate ship category, which are engaged in the carriage of passengers and/or cargoes and which are owned or registered in Australia.

One of the significant things about this legislation is that the introduction of smaller crews will eventuate only if high technology ships capable of being operated at the proposed new levels are introduced into the Australian fleet. Of course, this is one of the purposes of this legislation. The purpose is to bring about a situation in which crewing levels can be reduced, but not by introducing dangerous practices within the industry and not by sweating labour within the industry. I think that is particularly significant. Why, in a country which enjoys such a relatively high standard of living and relatively good conditions of employment, should there be any difference in the maritime industry? Of course, there should not be. People within the maritime industry have a right to see those circumstances reflected in their conditions of employment, in the incomes which they earn and in the way in which they return from engagement, just the same as other people in the Australian community.

One of the particular things to which we need to draw attention is that, while reference has been made to the crewing levels on Australian ships relative to those of other ships, it is not just a matter of looking at the crewing levels themselves. What we should do is look at the total cost of being able to achieve those crewing levels. There is no doubt that hitherto the situation has been such that the level of technology on many overseas vessels is significantly higher than on many of the Australian ships and, as a result, the crewing levels in some cases are lower. But if we were to take the marginal cost, in terms of the capital investment, to achieve the level of technology which is necessary to reduce, just by one or two, the crewing levels on some of those ships, we would find that perhaps the cost to those higher technology shippers overall is not significantly less than the cost to Australia, where we have higher manning levels.

As the Minister has indicated, the purpose of this legislation is to encourage capital investment in the maritime industry. The crew costs on a modern ship represent about 14 per cent of the total operating costs. So I would say that a difference of two or three up or down in terms of the manning levels really does not matter very much overall. (Quorum formed) The Minister also said in his second reading speech:

This package constitutes the greatest single step forward for Australian shipping. It represents the most progressive move made in decades.

He said:

It is an achievement that has been made possible by genuine goodwill, co-operation and consultation involving all parties-seafarers, ship operators and government.

That comment by the Minister was reflected as well in a very good editorial that appeared in the Australian newspaper after the report came out. In part, that editorial said:

But the report released yesterday by the Maritime Industry Development Committee indicates a quite spectacular outbreak of common sense. If the agreement between shipowners and the unions representing Australian crews announced in the report is put into effect, it could bring about a dramatic turn for the better in an industry which can determine the health of our whole economy.

Mr O'Neil —A major breakthrough.

Mr ROBERT BROWN —The editorial went on to say:

Over the past few years there has been a marked decline in the number of strikes and stoppages involving Australian seamen. The agreements outlined in the report of the Maritime Industry Development Committee should help to make more competitive an industry that is vital to this nation, depending as it does so greatly on its foreign trade.

Just a short while ago the honourable member for Grey (Mr O'Neil) interjected that it was a great breakthrough. Indeed, it has been a great breakthrough. The honourable member for Grey is very aware of that because of the very special interest that he shows in the development of Australian transport capacity. I know that he has followed and participated in this debate just as effectively as he did in the legislation that the Minister introduced concerning the Australian National Railways system. The Department of Trade itself has pointed out that the freight services deficit for Australia `has increased by 8 per cent in the first three quarters of 1985-86 over the corresponding period in 1984-85'. The Department of Trade has also said:

While Australia remains heavily dependent upon foreign shipping lines for the carriage of its seaborne trade it will continue to run a substantial deficit on shipment services.

As far as I am concerned, that is one of the fundamental issues related to this legislation and to the proposals which it seeks to put in place. The report `Moving Ahead', to which reference has already been made by a number of people and upon which this legislation was based, said in part:

Australia has the fifth largest shipping task of the world's trading nations on a tonne/km basis.

Yet Australian ships carry only about 3% (by volume) of our overseas trade. Commercially viable Australian ships can carry our exports and imports thus enabling Australia to retain their earnings, expand its employment base and generate more activity by servicing its own shipping industry. The benefits are great; the Bureau of Transport Economics has estimated that in 1984-85 Australia's sea freight bill of $5,800m contributed to the invisible's deficit. This cost of freight is approximately 11% of the total value of Australia's overseas trade.

Australia is a major world trading nation. That is reflected in the fact that Australia's total export of goods and services in 1985-86, of $38.1 billion, represented 16 per cent of total goods and services produced in Australia. Of course, as we know, that places Australia among the world's great maritime trading nations. Unfortunately, a relatively small, almost minuscule proportion, of our total imports and exports is being carried on Australia's flagships and therein lies the difficulty.

If we look at Australian Bureau of Statistics figures for the balance of payments it shows that for net shipments in 1985-86 the difference between exports and imports being carried on Australian ships is $2,435m. We paid overseas shippers that much as a net figure. But the situation is even worse than that. If we take the total cost of moving imports and exports we see that the total earnings by overseas shippers is $6,400m. Much of that amount does not show up in the ABS balance of payments figures. If, for example, imports are being sent to Australia on Australian ships that would be a payment from an Australian resident to an Australian resident and it would not show up in the balance of payments. If exports are being carried overseas on foreign ships that would be a payment from a foreigner to a foreigner and would not show up in the balance of payments figures either. So the more useful figure is the total shipping cost figure for exports and imports. An amount of $6,400m or 88 per cent was earned by foreign transport operators, and $860m or only 12 per cent was earned by Australian operators. So it is clear that by building up the Australian maritime fleet very significant benefits will accrue to Australia.

I know from the comments that have been made by the Minister about the importance of these service elements within our current account that he is aware of the importance of extending this type of earning capacity on Australia's part, not just into shipping so that we are able to carry a lot more of our commodity exports and imports but also into the other ser- vices associated with the freight industry-for example, the insurance of freight. Most of that is now conducted in New York or London and it could and should be conducted in Australia. This year we are looking toward a total current account deficit of about $14,000m. If we were able to overcome completely the commodity imbalance in the current account deficit we would take out of it only $4 billion worth of commodity imbalance leaving in the current account deficit the $10 billion that relates to transfers and to services. The Minister has taken up this issue and I am hoping that we will increasingly do so because it is in that service area where our problems in relation to the current account are being experienced.

Australia is almost totally dependent on overseas owned or overseas controlled shipping. When countries control shipping that gives them a tremendous commercial and economic power. Mention was made by an earlier speaker about an attempt to force Australia's producers of steaming coal to lower their prices significantly by Japan threatening not to send ships to Australia.

Mr DEPUTY SPEAKER (Mr Millar) —Order! The honourable member's time has expired.