Bills Digest no. 39 2005–06
Protection of the Sea (Shipping Levy) Amendment
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
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the Sea (Shipping Levy) Amendment Bill 2005
House: House of Representatives
Portfolio: Transport and Regional
Bill commences the day immediately following royal assent.
To remove the current cap on the
rate of levy imposed on certain shipping under the Protection
of the Sea (Shipping Levy) Act 1981. The levy funds pollution
prevention, response and mitigation measures.
Under the Protection of the Sea (Shipping Levy) Act
1981 (the Levy Act), ships of 24 metres or more and
which are carrying a minimum of 10 tonnes of oil that visit
Australian ports are liable for the levy. The maximum
payable under existing section 6 of the Levy Act is 6c per
ton.(1) However, the actual rate is set out in
the Protection of the Sea (Shipping Levy) Regulations, and
currently is 3.3c per ton. The actual rate has varied over the
years from less than 1c per ton in the early 1980s to 4c per ton in
1994. The current rate has applied from 1995.
The levy is used to fund the National Plan to Combat Pollution
of the Sea by Oil and other Noxious and Hazardous Substances (the
National Plan). Funds are used to buy and maintain oil spill
response equipment, provide training in oil spill response and meet
clean-up costs which cannot be attributed to a known polluter. In
2003 04, about $4.3 million was raised from the levy, which
represented over 90% of the total revenue of the National Plan. The
National Plan 2003 04
annual report noted:
The operating surplus of $484,627 for the
2003-2004 financial year was in line with the break even over time
policy set by government .Total income received during the
2003-2004 financial year increased by $468,094 compared with the
previous financial year. Levy revenue increased during the
reporting period due to an unforeseen rise in shipping
According to the Minister for Transport and Regional Services,
the rationale for removing the 6c a ton cap under the Levy Act is
essentially twofold. The first regards funding a potential future
Incidents overseas have shown the severe impacts
of a major pollution incident and that, while international
compensation regimes are generally highly effective, on occasions
the cost of responding to an incident can exceed the liability and
compensation limits that are available. In those cases, governments
and affected citizens have had to bear the surplus costs, which may
be many hundreds of millions of dollars.
The remaining 2.7c available within the current
cap on the protection of the sea levy (PSL) is intended to permit
the recovery of costs to government of any oil or chemical spill
which would be irrecoverable from the polluter. In light of recent
overseas experiences in dealing with major oil spills, it is likely
that this buffer now could be inadequate to recover costs that the
government may have to meet in the event of a major incident.
The international compensation regimes referred above include
Pollution Compensation Fund (IOPC). Under this, up to around
$400 million can be claimed,(3) including any part paid
by the shipowner. This will increase to around $1.5 billion, should
Australia become a member of a new supplementary fund. It is
understood that Australia is the process of preparing for
ratification of the supplementary fund.
More information on ship-source pollution incidents recorded by
the Australian Maritime Safety Authority (AMSA) can be found in the
National Plan 2003-04
annual report. Most of these did not require any response under
the National Plan. Historic information on
major oil spills in Australia is also kept by AMSA.
The second rationale for the removal of the cap is to assist in
the funding of a proposed emergency towage capability. The June
of the Australian Transport Council stated:
Ministers agreed in-principle to the introduction
of a national approach to maritime emergency towage around the
Australian coastline. The national approach, to involve
an integrated package of measures to ensure a minimum level of
emergency towage coverage in strategic regions around the
Australian coastline and to provide an appropriate regulatory
framework, will be finalised later in 2005 following completion of
a regulatory impact statement. The approach will include a
vessel for the northern section of the Great Barrier Reef and the
Torres Strait, which currently has no port-based emergency towage
The Bill s second reading speech outlined the
proposal(4) in more detail:
A key element of the proposed national approach to
emergency towage is the provisioning of a dedicated emergency
towage service in the northern section of the Great Barrier Reef
and the Torres Strait region. The service will be provided by an
AMSA-contracted vessel that will combine its emergency towage role
with the provision of navigation aid maintenance services in the
region. The combined role will minimise the costs of the new
arrangements and, as the current navigation aids contract expires
in June 2006, this will necessitate the new tender proceeding in
the fourth quarter of 2005.
Owing to the likely cost of the vessel resulting
from the tender, and the associated PSL revenue required, this will
necessitate removal of the current legislative cap on the levy in
time for the tendering arrangements to proceed. Removal of the cap
will enable adequate funding to be made available through
subsequent amendments in the relevant regulations. Removal of the
cap is required by end October 2005 in order to meet
contracting/tendering time lines associated with the new emergency
Item 1 of Schedule 1 amends
section 6 of the Levy Act to delete the current cap on the levy of
6c per ton.
The Government has not provided any details about what the
future rate of the levy might be once the current cap is removed.
However, the Minister noted that:(5)
There is sufficient safeguard in the system to
ensure that this amendment effecting the removal of the cap will
not enable unjustifiable levy rates to be set. The levy rate for
any quarter will be prescribed by the regulations and, as these are
a disallowable instrument, any amendments will be subject to the
usual parliamentary and regulatory scrutinies to justify the
proposed rate of levy at any time.
The levy is payable quarterly, provided that the relevant ship
visits a port at least once in the relevant quarter. Thus a 1000
tonne ship carrying the requisite amount of oil would be subject to
statutory maximum possible levy of $60 a quarter, irrespective if
it made one or ten visits port visits that quarter.
The Hon. Warren Truss MP, Second reading speech: Protection of
the Sea (Shipping Levy) Amendment Bill 2005 , House of
Representatives, Debates, 18 August 2005, p. 1.
Compensation could only be claimed if the perpetrator of the
spill was known.
op. cit., p. 1.
ibid., p. 2.
2 September 2005
Bills Digest Service
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© Commonwealth of Australia 2005
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