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Bills Digest No. 10 1999-2000 Stevedoring Levy (Collection) Amendment Bill 1999

Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Further Reading
Endnotes
Contact Officer & Copyright Details

Passage History

Stevedoring Levy (Collection) Amendment Bill 1999

Date Introduced: 2 June 1999

House: House of Representatives

Portfolio: Transport and Regional Services

Commencement: Royal Assent

Purpose

The Bill increases the funding available under the Stevedoring Levy (Collection) Act 1998 (the Principal Act) from $250 million to a maximum of $350 million.

The reason given for increasing the appropriation is the greater than expected cost of waterfront redundancies.

Background

The Principal Act and the Stevedoring Levy (Imposition) Act 1998 came into effect on 3 July 1998 and provide the legislative basis for the Government's plan to restructure working arrangements on the docks.

As part of these arrangements:

The Commonwealth has established the Maritime Industry Finance Company (MIFCo), a wholly owned Commonwealth company limited by guarantee, to administer a loan facility of up to $250 million to pay out redundant waterside workers.
Funds for the repayment of redundancies are to be recouped from participating stevedores via a levy on the loading and unloading of containers and vehicles in Australia [refer: sections 7 and 8 of the Principal Act].
The levy does not attach to bulk cargo and both major stevedores - Patrick Stevedores and P&O - have agreed that the levy will be absorbed into existing cost structures.
The levy is presently $6.00 per vehicle and $12.00 per container, loaded or unloaded. Maximum rates of $10.00 per vehicle and $20.00 per container are permitted by the legislation.
Prior to introduction, the Government announced that the scheme would be wound up within six or seven years.(1)

Eligibility

Section 18 of the Principal Act provides that the Minister may authorise payments:

in connection with 'qualifying redundancies'
in connection with specified activities associated with the reform or restructuring of the stevedoring industry including: occupational health and safety programs, training programs and the introduction of new technology or the improvement of wharf facilities
in respect of such restructuring activities as are prescribed by regulation,
in respect of relevant administrative costs, and
administrative costs incurred by the Commonwealth in connection with the collection of the levy.

The Minister for Transport and Regional Services, Hon John Anderson, reiterated in his Second Reading Speech that:

The Government ...will only agree to fund those reform initiatives which have objectives or outcomes that are consistent with the Government's seven waterfront reform benchmarks as the basis for continuing improvement.(2)

Those seven objectives in summary are:

An end to the overmanning and restrictive work practices.
Higher productivity. A commitment from the major stevedores to a benchmark of 25 lifts per hour as a national five port average.
Greater reliability through less industrial disputation and less interruption through elimination of restrictive work practices. The level of industrial action on the waterfront should be no worse, and preferably better, than the national average for all industries.
Injury and fatality levels must come back to the all industries' average or better.
Lower costs throughout the 'logistics chain of the waterfront gateway'.
A drive to make full effective use of the technology available to increase productivity and improve ship turnaround times.
Improved training. We will actively promote training opportunities and apprenticeship programs.(3)

Post settlement

It is beyond the scope of this Digest to review either the history of the Patrick's dispute or the economics of the industry. Those and other related matters have been dealt with extensively elsewhere and interested readers may care to refer to the items listed under 'Further Reading' below.

For present purposes the following outline of events serves to bridge the gap between past publications and the present:

Interim agreement on the terms of the protracted dispute between Patrick Stevedoring and the Maritime Union of Australia (MUA) was reached June 1998. A final agreement was concluded on 3 September 1998 with financial guarantees being provided to the ACCC in respect of outstanding third party boycott claims against the MUA. (A $3 million pay-out to injured third parties was made from the Stevedoring Industry Reform Small Business Compensation Fund in late June 1999. Further payments of up to $4.5 million are anticipated.(4))
On 14 January 1999, reports appeared that Patrick Stevedores' main rival, P&O Ports intended to 'slash' its workforce 1300 strong workforce by 40 percent.(5)
On 22 January 1999, the Treasurer, Hon Peter Costello announced that he had directed the Australian Competition and Consumer Commission (ACCC) to monitor 'the prices, costs and profits relating to the supply of stevedoring services at container terminals' in the ports of Adelaide, Brisbane Burnie, Fremantle, Melbourne and Sydney.(6)
On 12 May 1999, it was reported that the 'Federal Government ha[d] been forced to add an extra $100 million to its scheme to finance the exit of workers from the waterfront after a blow-out in the cost of redundancies.'(7)
Ship owners' representatives, such as the Australian Shipping Federation, have alleged that the stevedoring companies are not passing on cost savings from the Government's reform package. These claims are not, for the present at least, accepted by the Government.(8)
Whilst figures cited and estimates vary, it undeniable that there has been a further significant decline in the number of waterfront workers since the start of 1998.
About 800 workers have taken redundancy packages under the present scheme and more are to come.(9) Press reports suggest that P&O Ports and Patrick Stevedores are both pushing through job cuts totalling about 50% since the 1998 dock's dispute.(10) In the case of P&O Ports, the cutbacks are to be effected by a new enterprise agreement that sees the departure of 450 full-time permanent staff and their replacement with 360 permanent part-timers.(11)
These industry-wide reductions represent a further decline in numbers employed on the docks from

- 1951 24,500

- 1961 22,600

- 1971 16,800

- 1981 8300

- 1990 8146

- 1991 5707

- 1993 3800

- to less than 300 in 1999.(12)

Figures for the first quarter after the settlement show a mixed result in terms of productivity improvement. Average crane rates in the five major ports dipped slightly in the 3 months to December 1998 with a significant improvement in Melbourne being offset by equally significant declines in Sydney, Brisbane and Fremantle.(13) There was a marginal improvement in March Quarter of 1999 but the Sydney figure of 17.7 containers per hour is still below the December 1997 figure and well adrift of the Government's target rate of 25 lifts per hour.(14) Later results - after the P&O Ports enterprise agreement comes on stream - may be more encouraging.
By early July 1999, P&O Ports had reached agreement with all its workforce bar those in the West Swanson dock on revised work practices and manning levels.(15) The matter was then scheduled to go before a Full Bench of the Australian Industrial Relations Commission.(16)

Senate Committee

The present Bill was passed by the House of Representatives on 9 June 1999.

On 28 June the Bill was referred to the Senate Rural and Regional Affairs and Transport Legislation Committee which is due to report by 24 August 1999.

Debate on the Bill in the House focused on what the Opposition has claimed is the inadequate explanation for the apparent cost blow-out associated with the extension of the scheme which will now be wound up in 2010.(17)

The Opposition has also questioned whether funds have been distributed outside the terms of the seven benchmark objectives set by the Government in April 1998.(18)

The Explanatory Memorandum to the present Bill states that when the legislation was enacted:

... the Government believed that [an appropriation of $250 million] would provide sufficient funds to meet the costs arising from the implementation of reform and restructuring in the stevedoring industry ... However, the estimated number and cost of redundancies is greater than anticipated. Therefore, the Government is seeking to ensure that it is able to authorise funding to meet the total expected cost of redundancies and ensure that sufficient funds are available for other worthwhile reforms and to meet the administrative costs associated with collection of the levy.(19)

Responding to Opposition criticisms alleging a lack of transparency, the 'duty' Minister, the Minister for Veterans' Affairs, Hon Bruce Scott, closed the debate in the House by providing additional information on the scheme. He noted:

As members opposite are aware, MIFCo has estimated that $195 million will be required to meet the cost of redundancies. This is up from the original figure of $148 million. MIFCo is negotiating a loan to cover that amount of principal. Contrary to the assertions of the member for Melbourne, the interest rates which the banks have offered MIFCo have not been falling. The current estimated interest cost for borrowing $195 million over the term of the loan until 2010 is more than $100 million. The total additional cost of redundancies and extra interest is therefore estimated to be in excess of $100 million, and that is why the government seeks an additional $100 million for the appropriation.(20)

Main Provisions

Item 1 provides for the maximum appropriation in relation to the scheme to be increased by $100 million.

Endnotes

Hon Peter Reith MP, Second Reading Speech, Parliamentary Debates, 8 April 1998, pp 2725-2726.
Parliamentary Debates (House of Representatives), 2 June 1999, pp 5749-5750.
Minister for Workplace Relations and Small Business, Waterfront Reform: Seven Objectives, 8 April 1998.
Australian Competition and Consumer Commission, Press Release, 29 June 1999.
Sid Marris, The Australian, 14 January 1999.
Hon Peter Costello, Press Release No.3 of 1999, 'Prices monitoring of container stevedoring services'.
Helen Trinca, 'Extra $100 million for dock workers' redundancies', Sydney Morning Herald, 12 May 1999, p 58.
Mark Davis, 'Ship owners want their cut', Australian Financial Review, 14 May 1999, p 7. See also 'Docks duopoly takes its toll', Australian Financial Review, 6-7 March 1999.
Hon John Anderson, Parliamentary Debates (House of Representatives), 2 June 1999, p 5749.
Mark Davis, op cit, 14 May 1999.
Michael Bachelard, 'P&O creates new class of wharfie', The Australian, 3 June 1999.
ibid, citing Bureau of Transport and Communications and Interstate Commission statistics.
Mark Davis, 'New port rates give little joy', Australian Financial Review, 1 April 1999.
Helen Trinca, 'Wharfies speeding up their loading', Sydney Morning Herald, 25 June 1999, and Michael Bachelard, 'Wharfies lift game', The Australian, 25 June 1999. Both articles cite Bureau of Transport Economics figures.
Michael Bachelard, 'Defiant wharfies vote out P&O deal', The Australian, 2 July 1999.
Michael Bachelard, 'Wharies imposed upon', The Australian, 13 July 1999.
Cheryl Kernot MP, Parliamentary Debates (House of Representatives), 9 June 1999, pp 5125-5127. Hon Bob McMullan MP, Parliamentary Debates (House of Representatives), 9 June 1999, pp 5168-5170, at p 5170.
Lindsay Tanner MP, Parliamentary Debates (House of Representatives), 9 June 1999, pp 5129-5132, at 5129.
Explanatory Memorandum, Stevedoring Levy (Collection) Amendment Bill 1999, p 3.
Hon Bruce Scott MP, Parliamentary Debates (House of Representatives), 9 June 1999, p 5170.

Contact Officer and Copyright Details

Bob Bennett
26 July 1999
Bills Digest Service
Information and Research Services

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Published by the Department of the Parliamentary Library, 1999.