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Tuesday, 8 March 2005
Page: 6

Senator MARK BISHOP (12:52 PM) —The Navigation Amendment Bill 2004 is a minor regulatory bill which makes some technical adjustments to the Navigation Act as it affects the safety of ships at sea. The first two amendments in the bill simply remove an inconsistency within the current law. The bill also removes the uncertainty caused by a lower court decision as to whether offences under the act are indictable or summary. To that extent the bill is not controversial.

Another amendment relates to penalties. Essentially, it will bring penalties in the Navigation Act into line with those set out in the Crimes Act. Instead of specifying financial penalties and jail terms specifically, the formula approach will be adopted. For example, the Crimes Act provides that, if an offence is expressed to be subject to a penalty, no fine is specified. Instead, the maximum fine will be five penalty units multiplied by the maximum prison term in months. In essence, the application of this formula will help to standardise the Navigation Act, although it will effectively increase the penalties as well. This is a practical issue, and we on this side of the chamber support the changes.

There is, however, a matter referred to in the Bills Digest. It concerns the relationship between the principal legislation and the setting of penalties in regulations. The point is well made, and it goes to consistency of approach. As this bill seeks to make all offences under the bill indictable offences, the offences and penalties set out in the regulations ought to be contained in the principal act, not in the regulations, and attention is drawn to this anomaly. The suggestion is that the bill should have provided an opportunity to bring about that consistency. The minister might care to address the reasons for that in his or her response in closing the second reading debate.

It is also opportune today to address some matters on shipping policy. As Australians, we ought to be embarrassed about our either disappearing or disappeared shipping industry. After all, we are almost totally dependent on shipping for our export trade, and perhaps a few facts should be outlined in order to set the context of my remarks. Of the world seaborne trade of 6,000 million gross tonnes, trade to and from Australia comprises almost nine per cent—quite a significant figure. The Australian industry’s part of that nine per cent is only 1.4 per cent—in other words, about 85 per cent of our shipping costs are paid to overseas operators. The cost to Australia, in those same net terms, is over $3.6 billion per year, and growing—almost 14 per cent of the current account deficit. As we all know, the current account deficit is at an all-time high, and is most likely to keep growing. The trend for Australian participation is downwards, with increasing foreign dominance and increasing losses of foreign exchange.

The story is almost the same with insurance. Very little insurance underwriting is done by Australians. It almost seems that we have a fatalistic attitude that these are not native industries for ourselves. The question is exactly the same as in any other industry—essentially in our secondary and tertiary industries. It is interesting, of course, to ponder that riddle, particularly in light of more recent discussion as changes in the economy, the net foreign debt and the current account deficit become more central to our future.

In economic terms, transport cost is invisible—and one makes the obvious point in passing that for this government that is a most appropriate description. In addition to what might be called a cringe mentality, in Australia we have always suffered the dead hand of conservative forces in this area of creation and maintenance of emerging industries. It is a matter of great regret that these forces are strongest in government in the area of primary industry, which has always been dominated by the National Party. It is no accident that for many years the transport portfolio has been captive to the National Party, with few exceptions. Nor is it an accident that trade and industry portfolios have again been dominated in this context over time by the National Party.

Given the huge power of that single vested interest, it is little wonder that trade, industry and transport policy in this country is so skewed. Look at transport policy: whether it be road funding, rail investment or shipping—both international and coastal—the purpose is the same. It is the user who is the sole beneficiary, not the industry providing the services or consumers who pay the costs at the retail end. There is not the slightest interest in transport industries per se; they are simply a crude cost. And if they are only a crude cost, the obvious solution is to reduce the crude cost to the lowest possible point. Yet we see that the cost of this policy direction to our economy in net terms is absolutely enormous.

We therefore have a glaring double standard in that we choose which industries we as a nation support, and that support, obviously, and in another context properly, is determined by those who are elected to government and those who are in power. In terms of consequences it means that effectively we do not have a real transport policy in this country. What we do have is a piecemeal of road funding and, belatedly, early signs of a regenerating rail industry. But the gaps between the two continue to be enormous. We still have massive bottlenecks at our ports, for example. It is not a new problem caused by the huge demand for coal or iron ore, which has been the subject of media reporting over the last three or four months. No amount of buck-passing back to the states can excuse the losses to the Commonwealth and, by definition, to all of us when the losses are national and apply across the board to every citizen living in this country. Getting a container released through Customs is as slow as it has ever been, largely due to the processes put in train by Customs. Of course, Customs is a Commonwealth government agency.

Other Western nations have built new container ports outside metropolitan areas. In Australia, where nearly all mainland cities are growing areas, the main container ports are landlocked by suburbia. The crisis with the bulk loading facilities has now, apparently, caught everybody by surprise—but there should not be surprise. We simply do not have a comprehensive national transport policy. The current government’s response is glib. They say, ‘Gee, yes, we do have a problem, but congestion at our ports is a state problem,’ and they give the state governments a flick in passing. But out on the Pacific Ocean there are hundreds and hundreds of ships sitting at sea awaiting a berth, paying tens of thousands of dollars demurrage every day, and the government say it is not their fault. If it were wheat or meat it would not happen. They are not new problems. They are endemic in Australia simply because of the totally self-interested producer basis upon which transport policy is formed, maintained and implemented. That is the way it has always been. So it is no surprise to anyone that the shipping industry currently is in such a parlous state.

There are some others who are accountable for these appalling circumstances. Here I refer to some of those more influential economists whose thesis has long been based on the theory of natural advantage or natural comparative advantage: you concentrate on what you are best at and you do not allocate funds or resources to develop alternatives over time. Therefore we grow more meat and wheat and we dig more iron and coal—we do whatever comes not necessarily easily but whatever comes naturally. By that attitude, when international shipping is so cheap, we are silly not to take advantage of it, the argument goes. It does not matter if it is a floating hulk of unknown ownership with a crew of virtual slaves travelling up and down our major coasts.

So the theory of natural advantage is very convenient. If it were applied to any other industries we would have very few at all in this country. It also assumes that shipping will always be cheap but, as we are now seeing, that cycle has shifted. Freight rates have gone through the roof and even more export dollars are being lost through the added costs of shipping. Exporters are suddenly complaining as their added transport costs have spoilt their competitiveness. Market forces are wonderful when they run so strongly in your favour, but it is a great excuse not to have a policy. But now, of course, the consequence of the inaction of the last 10 years is that we are at the total mercy of overseas providers, hence the question of why we have no shipping industry of our own.

We in the Labor Party believe that we should have an indigenous shipping industry. We cannot see why shipping should be different from any other industry. But it does need a policy and it does need a fair degree of leadership, and we suggest that they have both been absent over the last 10 years under the current government. Indeed it is ironic that this bill is about some minor regulatory policy on ship safety, and yet one of the big issues is the safety of much of the international fleet which is used to transport Australia’s trade. The government’s policy means that our coastline is increasingly being serviced by tramps from around the world.

The single-voyage permit system, as it is now administered, is about dumping services against the interests of local industry. It is no wonder then that, since this natural advantage or comparative advantage argument has taken hold, our coastal shipping trade has been decimated to the point where it is virtually non-existent and, if one were a realist, almost impossible or impossible to revive. The scheme of single-voyage and continuous-voyage permits has seen a reduction from 40 per cent to 25 per cent in the number of Australian flag ships plying our coastline. Of course, all the dollars involved in that have gone overseas. And so the story goes on and there is no end in sight.

There are few countries in the world where cabotage is not fiercely protected, and that includes that great bastion of free trade, the United States. That is why we believe that we too should have a competitive shipping industry. Many will know that coastal shipping around Australia carries 30 per cent of the non-urban freight task. Why is that the case? It is because, in the final analysis, it is more efficient than both rail and road. For example, the supply of petroleum products to North Queensland is managed by two ships. For road transport, that is the equivalent of 30,000 B double trips per year. So what can we do to get some policies in place to encourage the growth of our local industries?

Firstly, and obviously, we need to get The Nationals out of the control room or out of their dominance of industry, trade and transport related portfolios. While ever they run those central portfolios we cannot expect a rational or efficient approach in the genuine national interest. Secondly, we need some changes to attitudes whereby some equivalence is given to the regulatory and financial environment in which an Australian industry can grow, and grow successfully over time. In doing that we need to recognise the reform already implemented in the 1980s by the then Labor government in shaking out a lot of the undesirable featherbedding that was occurring. Given access to modern technology, there is no reason for Australian crews not to be competitive with shipping from other Western countries. But it must be said that there does need to be a level playing field.

As we know, the government continues to stall in its response to the Independent Review of Australian Shipping, which was commissioned by the Australian shipping industry in 2002—over three years ago. That report was presented to government in September 2003, and since that time there has been no comment—only a stony silence—from the government. Clearly, for the reasons I have set out, it is fair to say that there is not the slightest interest. The conclusions of that independent shipping review are quite instructive and worthy of serious consideration.

The review observed that international shipping is obviously a global market in which Australian operators are encumbered by constraints not faced by competitors. Those constraints were described variously as: the inability to choose a ship register of their choice because of the provisions of the Shipping Registration Act; the inability to recruit and retain Australian officers at internationally competitive terms, due to the operation of the tax act; and an in-built prejudice or bias against an indigenous Australian shipping industry. In simple terms, the remedies recommended were the removal of these constraints but stopping short of any policy requiring government grants or subsidies. For coastal shipping, the review found that domestic operators were at a regulatory disadvantage to overseas operators using the single- and continuous-voyage permit system.

The key element though is that foreign operators are not burdened by the Australian tax system, employment conditions or employee costs. That is, shipping services are effectively being dumped in circumstances that would not be tolerated in any other domestic industry. However, I say again that that should not surprise anyone because none of these reforms, none of these changes and none of this desire to create an indigenous shipping industry is in the least bit palatable to the government. To them, any Australian shipping industry is a threat and, therefore, all other policy is subjugated to that prime need.

One asks the obvious question: what future is there for shipping? It seems to us that the simple answer is that, while ever we have The Nationals in control of these key policy areas—transport, industry and trade—there is little hope. Other industries, like the manufacturing of agricultural chemicals, fertilisers or any other primary industry need, also face that same attitude. That is why the debate on a free trade agreement with major countries such as China all of a sudden becomes so interesting and fascinating—because, again, guess who is in control of policy? The debate that will come with the free trade agreement with China and the current debate that we are having on shipping policy are indeed sad ones—firstly, because it is so vital for our country that we do something other than bend before the self-interested sectional interests that dominate these areas of policy; and, secondly, because we need to grow and get past attitudes, which may have had some strength or relevance one hundred years ago, whereby we deny ourselves opportunities into the future. It is simply time for change and it is time for the development across-the-board of some serious transport policies that are truly nationally focused and nationally orientated and that give national outcomes as opposed to narrow sectional or purely producer outcomes.

We must say that at this stage there is a serious vacuum, and you would be very generous indeed to suggest that there is any sign at all that change will occur over the next two or three years. The obvious forecast—although not the hope—is that our shipping industry will be allowed to wither and we will continue to pay increasing amounts in both real and normative terms to foreigners to ship out the goods we produce. Unfortunately, that is the bottom line in this debate.