Coastal Trading (Revitalising Australian Shipping) Bill 2012 [and] Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012

Bills Digest no. 151 2011–12

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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.

Les Nielson, Economics Section
Michele Brennan, Law and Bills Digest Section
18 June 2012

Contents
Purpose
Background
Financial implications
Key provisions – Coastal Trading Bill
Key provisions—Consequential Amendments Bill


Date introduced:  22 March 2012
House:  House of Representatives
Portfolio:  Infrastructure and Transport
Commencement:  1 July 2012 for the Coastal Trading (Revitalising Australian Shipping) Bill 2012 (Coastal Trading Bill). The substantive provisions of the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012 commence immediately after the commencement of the Coastal Trading Bill.

Links: The links to the Bills, its Explanatory Memorandum and second reading speeches can be found on the Bills’ home pages for the Coastal Trading (Revitalising Australian Shipping) Bill 2012 (Coastal Trading Bill) and Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012 (Consequential Amendments Bill), or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose

The purpose of the Coastal Trading (Revitalising Australian Shipping) Bill 2012 (Coastal Trading Bill) is to provide a new regulatory framework for the Australian coastal shipping trade. It replaces Part VI of the Navigation Act 1912. This Bill is one of a suite of Bills which seek to implement the Government’s shipping policy reform, ‘Stronger Shipping for a Stronger Economy’.

The purpose of the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012 (Consequential Amendments Bill) is to amend:

  • Australian Maritime Safety Authority Act 1990
  • Navigation Act 1912
  • Occupational Health and Safety (Maritime Industry) Act 1993 and
  • Seafarers Rehabilitation and Compensation Act 1992.

These amendments are consequential to the amendments proposed in the Coastal Trading Bill. The Consequential Amendments Bill also enacts a number of provisions that clarify the arrangements that will apply in the period of transition to the new coastal trading regulatory structure.

Background

As mentioned above, the Bills covered in this Bills Digest are part of a broader package of Bills which seek to implement the Government’s shipping policy reform, ‘Stronger Shipping for a Stronger Economy’.[1]  The other related Bills are the:

  • Shipping Registration Amendment (Australian International Shipping Register) Bill 2012[2]
  • Shipping Reform (Tax Incentives) Bill 2012[3] and
  • Tax Laws Amendment (Shipping Reform) Bill 2012.[4]

General background on this package of Bills can be found in the Library’s recent Bills Digest on the Shipping Reform (Tax Incentives) Bill 2012 and the Tax Laws Amendment (Shipping Reform) Bill 2012.[5]

Coastal trade

In 2009–10 the total tonnage of coastal cargo handled by Australian ports was 104.8 million tonnes. Coastal cargo represented 10 per cent of all cargo moved across Australian wharves. The share of interstate freight tonnage to total coastal freight increased from 58.7 per cent in 2008–09 to 63.7 per cent in 2009–10.[6] The following graph illustrates total coastal cargo volumes between 2000–01 and 2009–10:[7]

Coastal freight unloaded at Australian ports 2000-01 to 2009-10 million tonnes

In 2009–10 some 54 per cent of coastal freight was made up of crude dry bulk materials, with an additional 22 per cent being mineral fuel shipments.[8]  The following points stand out:

  • bulk cargo continues to represent the majority of coastal cargo – approximately 85.2 per cent by weight in 2009–10
  • the quantity of loaded containerised cargo increased 14.5 per cent from 4.4 million tonnes to 5.1 million tonnes between 2008–09 and 2009–10
  • liquid bulk freight loaded decreased 9.5 per cent from 11.7 million tonnes in 2008–09 to 10.6 million tonnes in 2009–10 and
  • dry bulk and other non-bulk cargo each increased by 2.7 and 2.2 per cent over the same period.[9]

Given the above figures it comes as no surprise that the ports showing the largest amounts loaded and unloaded are those specialising in bulk cargos:

  • Weipa remained the largest port in terms of total loaded coastal cargo, with over 13.2 million tonnes in 2009–10
  • Port Hedland had the second largest volume of freight loaded in 2009–10, 5.4 million tonnes – a 70.8 per cent increase over 2008–09
  • Gladstone and Melbourne were the third and fourth largest ports in terms of loaded coastal freight – 3.6 and 3.1 million tonnes, respectively
  • Gladstone remained the largest port in terms of total unloaded coastal freight, with approximately 14.3 million tonnes unloaded in 2009–10, a 3.2 per cent increase over 2008–09
  • Port Kembla had 7.2 million tonnes of freight unloaded in 2009–10 – a 43.2 per cent increase over 2008–09 – to be the second largest port in terms of total coastal freight unloaded. Most of the increase in freight unloaded at Port Kembla was dry bulk cargo, which increased 2.1 million tonnes between 2008–09 and 2009–10
  • Sydney was the third largest port in terms of coastal freight unloaded in 2009–10, with 5.2 million tonnes – a 17.1 per cent increase over 2008–09. Liquid bulk cargo unloaded at Sydney increased nearly one million tonnes between 2008–09 and 2009–10 and
  • Melbourne and Brisbane were the fourth and fifth largest domestic ports for unloaded cargo, respectively, and both ports experienced a decline in cargo unloaded between 2008–09 and 2009–10.[10]

The major point arising from these figures is that, by any measure, the freight task being undertaken by coastal shipping is a substantial one. That said, one interested party contends that the Australian coastal dry bulk trade is a ‘thin’ market – one with a low number of buyers and sellers. This means that the demand for shipping of dry bulk cargo is not as strong as may be indicated by the above statistics.[11] In part, this may be due to the presence of dedicated shipping owned by dry bulk commodity producers (such as BHP Billiton) servicing a substantial proportion of this trade.

Coastal trade regulation

The Navigation Act 1912 requires that all vessels engaged in coastal trading either be licensed to do so or have a permit.[12]

Vessels may be licensed to participate in Australia’s coastal trade irrespective of flag and crew nationality. Licences are issued on condition that:

  • the vessel’s crew is paid Australian wages while the vessel trades on the Australian coast and
  • the vessel’s crew has access to the vessel’s library facilities.[13]

An unlicensed ship may be granted a permit to trade on the Australian coast in the carriage of either cargo or passengers where:

  • there is no suitable licensed ship available for the shipping task
  • the service carried out by licensed ships is inadequate for the required task and
  • it is considered to be desirable in the public interest that an unlicensed ship be allowed to undertake that shipping task.[14]

There are two types of permit issued to allow unlicensed vessels to engage in the Australian coastal trade:

  • a Single Voyage Permit (SVP)  -  issued for a single voyage between designated ports for the carriage of a specified cargo or passengers or
  • a Continuing Voyage Permit (CVP) - issued for a period of up to three months and enables a vessel to carry specified cargo between specified ports for that period.[15]

Vessels operating under one of the above permits are more likely to be foreign flagged.

Voyages made under permit

In 2009–10, ships using both SVPs and CVPs moved 15.1 million tonnes of freight around the Australian coast. This represented a 9.6 per cent increase on the 2008–09 figures. Container freight carried under permits increased 56.0 per cent from 44 342 twenty-foot equivalent units (TEUs) in 2008–09 to 69 175 TEUs in 2009–10. Overall, the share of coastal freight carried under permits to the total coastal freight increased from 26.6 per cent in 2008–09 to 28.9 per cent in 2009–10.[16]

Application of the Fair Work Act 2009 to coastal shipping

Regulations 1.15D and 1.15E of the Fair Work Regulations 2009 apply the provisions of the Fair Work Act 2009 to vessels licensed to trade on the Australian coast or to vessels operating in that trade under SVPs or CVPs, or a majority Australian crewed ship operating in the coastal trade from 1 January 2010.[17]  In his second reading speech to the Coastal Trading Bill, the Minister for Infrastructure and Transport noted that:

There has been some debate regarding the industrial arrangements for vessels engaged in the domestic coastal trade.

This government made the decision in 2009 that vessels operating in the coastal trade will be subject to the provisions of the Fair Work Act. This was implemented through the Fair Work Act Regulations 2010.

It is this government's policy that this scope of coverage will not change. These vessels are operating in the domestic economy and these seafarers are entitled to be paid Australian wages.[18]

Package development

As mentioned above, general background on all the Bills in this package can be found in the Library’s recent Bills Digest entitled Shipping Reform (Tax Incentives) Bill 2012 [and] Tax Laws Amendment (Shipping Reform) Bill 2012’. However, it is worth repeating some of the detail of the development of the two Bills dealing with the coastal shipping trade in order to make better sense of the positions of particular interest groups noted below.

On 19 December 2011 exposure drafts of the two coastal shipping Bills were released.[19]  More than 15 submissions were received on the exposure drafts.[20] As a result of the submissions received on the above mentioned coastal shipping Bills, a second exposure draft of the Bills was released in March 2012. Further submissions received on this second set of exposure drafts have not been made public. Some of the positions of interested parties on these Bills are drawn from their comments on the first exposure drafts.

Outline of the Bill

Briefly, the Coastal Trading Bill enacts standalone legislation that requires ships trading on the Australian coast to be appropriately licensed. Under the proposed legislation three types of licence will be issued:

  • a general licence that enables a vessel to have unrestricted access to coastal trading and lasts for a period of no longer than five years (but may be renewed)
  • a temporary licence that is valid for 12 months, but only authorises the licence holder to undertake coastal trading to the extent specified in the licence and
  • an emergency licence for a period of no more than 30 days.

Basis of policy commitment

The Minister for Infrastructure and Transport announced this package of shipping reforms on 9 September 2011.[21]

Committee consideration

These Bills, together with the other Bills in this package, were referred to the:

  • Senate Economics Legislation Committee
  • Senate Education, Employment and Workplace Relations Legislation Committee and
  • House of Representatives Standing Committee on Infrastructure and Communications.

The Senate Economics Legislation Committee is due to report by 19 June 2012.[22]  The Senate Education, Employment and Workplace Relations Legislation Committee decided not to release a substantive report, instead recommending that the Senate rely on the report to be produced by the Economics Legislation Committee.[23] The House of Representatives Standing Committee on Infrastructure and Communications tabled its report, which recommended that the House pass the Bills, on 24 May 2012.[24] A dissenting report by the Coalition members of the Committee recommended that the House not pass the Bills. The dissenting report stated:

The new regulatory scheme for coastal shipping embodied in these bills (“New Scheme”) is deeply flawed and will not achieve its stated objectives. We highlight three key flaws in the New Scheme:

  • It is likely to significantly increase costs to users of coastal shipping, and that cost burden will be passed on throughout the economy
  • The claimed benefits depend on a compact with unions including the Maritime Union of Australia (MUA) which has not yet been agreed
  • The objective of revitalising the Australian shipping industry is unlikely to be achieved.[25]

Policy position of non-government parties/independents

Generally, the Coalition appears to be concerned that the proposed changes, including the proposed tax incentives, are the result of pressure from the Maritime Union.[26] The Coalition is also concerned that the package, particularly the elements relating to the licensing of foreign vessels to work on Australian coastal routes, will reduce competition for shipping services and increase shipping costs, particularly for the cement industry.[27]

Position of major interest groups

The Australian Industry Group (AIG) has expressed qualified support for the proposed changes to the coastal trading regulations contained in these Bills, in the following terms:

[AIG] supports the Australian Government’s efforts to revitalise the coastal shipping industry but not at the cost of making employers in other industries less competitive and productive, and threatening the jobs of workers in other industries.[28]

The AIG is particularly concerned that the proposed changes will lead to increased shipping costs for its members.  CSR Limited has also taken the same view.[29]

The National Bulk Commodities Group, a peak body representing users of dry bulk shipping services is also concerned that the proposed changes will unnecessarily restrict competition in the Australian coastal trade by requiring foreign flagged shipping to comply with the provisions of the Fair Work Act 2009 while trading on the Australian coast.[30]  The Cement Industry Federation is particularly concerned about this point.[31]

A group of bulk shipping users reportedly shares these concerns and is seeking a Productivity Commission review of the Bills.[32] The Business Council of Australia also seeks to have these Bills referred to the Productivity Commission.[33]

The Australian Shipowners Association supports all the Bills in this package.[34]  Furthermore, the Association does not agree that the proposed changes will automatically increase coastal shipping costs.[35] Reportedly, the Association estimates that the overall package of measures introduced into Parliament (particularly the tax concessions) will lead to shipowners spending $4 billion to introduce new ships to the Australian merchant fleet.[36]  Sugar Australia notes that the above mentioned tax concessions provide an opportunity for it to provide a new vessel for the Australian registry, providing the relevant Acts were appropriately structured.[37]

Financial implications

The Explanatory Memoranda to these Bills state that they will have no impact on Commonwealth expenditure.[38]

Key provisions – Coastal Trading Bill

Part 1—Preliminary

Clauses 3, 4 and 5, in Part 1 of the Coastal Trading Bill, set out the object of the proposed Act, its constitutional basis and a simplified outline of the Act.

Amendments to the Coastal Trading Bill moved by the Shadow Minister for Infrastructure and Transport, Warren Truss, propose that the objects provision at clause 3 of the Bill should also refer to the following objectives:

  • promoting competition in coastal trading and
  • ensuring the efficient movement of passengers and cargo between Australian ports.[39]

Mr Truss’ proposed amendments address concerns raised in some submissions to the House of Representatives Standing Committee on Infrastructure and Communications inquiry into the shipping reform Bills, referred to above.[40]     

Part 2—Interpretation

Clause 6 of the Coastal Trading Bill sets out relevant definitions. Item 4 of the Government amendments to the Coastal Trading Bill inserts subclause 6(1A) into the Bill, to provide that an ‘energy security situation’ exists if:

  • a vessel is used to undertake a voyage authorised by a temporary licence
  • the vessel is carrying a liquid fuel product[41]
  • special circumstances, to be prescribed in regulations, exist that require the vessel to load or unload a liquid fuel product at a port that is not authorised by the temporary licence.[42] 

If an energy security situation exists, the holder of a temporary coastal shipping licence may apply for a variation to that licence. Special conditions apply to such applications, which are discussed further in relation to clause 43 of the Bill, below.

Clause 7 of the Coastal Trading Bill defines the term ‘coastal trading’. This definition applies to ships engaged in voyages of a commercial nature carrying passengers or cargo and covers:

  • trips between a port in one state (or territory) and a port in another state (or territory)
  • trips between two or more ports in the same state (or territory), followed by trips to one or more states (or territories) and
  • trips between two ports within the same state (or territory) where the vessel is the subject of a declaration made under subclause 12(2) of this Bill.  

The Explanatory Memorandum provides examples of various scenarios of how a vessel would be engaged in coastal trading for the purposes of this definition.[43]

Part 3—Provisions relating to the application of this Act

Clause 10 specifies that the Act will not apply to military vessels, Commonwealth vessels used for non-commercial activities, fishing vessels, inland waterway vessels, offshore industry vessels, recreational vessels, salvage vessels and tugboats. These same classes of vessels do not qualify for the tax concessions that are an essential part of the overall shipping reform package.[44]

Further, clause 11 allows the Minister to exempt by legislative instrument a vessel or a class of vessels, or a person or a class of persons, from the operation of the Act. Such exemptions must not be inconsistent with Australia’s international obligations and the Minister must be satisfied that such an exemption will not jeopardise the safety of a vessel or the persons on board. Clause 12 provides for the shipowner to apply to the Minister for a declaration that the Act applies to their vessel while it is engaged in intrastate trade.

Part 4—Licences

Division 1—General licences

Clause 13 allows the owner, charterer, master or agent of a vessel, or a person specified by regulations, to apply for a general coastal shipping licence in respect of a single vessel, providing that vessel is registered on the Australian General Shipping Register.

Briefly, under amendments contained in the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012, from 1 July 2012 there will be two Australian shipping registers:

  • the Australian General Shipping Register (the General Register) - which will be primarily used by domestic vessels and Australian vessels with international certification that wish to have access to the Australian coastal trade or choose to remain on the General Register and
  • the Australian International Shipping Register (the International Register) - which will be open to ships that engage in international trade and meet specific criteria. The purpose of the International Register is to put Australian companies on a level footing with their international competitors.

Under clause 15 of the Coastal Trading Bill, the Minister must generally either grant or reject an application for a general coastal shipping licence within ten business days.[45] Such licences are granted for a period of not more than five years under clause 16.

Clause 21 sets out the general conditions for the grant of a general coastal shipping licence, as follows:

  • the vessel must be registered on the Australian General Shipping Register
  • when the vessel is trading on the Australian coast, each seafarer working on it must:

–      be an Australian citizen
–      hold a permanent visa or
–      hold a temporary visa that does not prevent them from working on the vessel

  • when the vessel is engaged in the coastal trade a copy of the licence must be conspicuously displayed
  • the licence holder must comply with the reporting requirements under clause 27 (see below) and
  • the licence holder must comply with any other conditions prescribed by regulations.

Clause 22 allows the Minister to impose additional conditions, remove conditions or modify existing conditions of a general coastal shipping licence.

Clause 23 allows a civil penalty to be imposed for a breach of a condition of a general coastal shipping licence.  The maximum penalty that may be imposed is 50 penalty units for an individual and 250 penalty units for a corporation.[46]

Clause 24 allows the Minister to renew a general coastal shipping licence, while clause 25 allows the Minister to cancel a general licence after a show cause procedure. Under clause 26, a licence holder may surrender their licence at any time.

Clause 27 requires a person who holds a general coastal shipping licence at any time during a financial year to provide a report to the Department on the cargo and passengers that the vessel has carried, and the ports at which the vessel called, during that financial year, no later than 30 days after the end of that financial year.

Division 2—Temporary licences

Clause 28 of the Coastal Trading Bill allows the owner, charterer, master or agent of a vessel to apply for a temporary coastal shipping licence. This clause also allows a ‘shipper’, that is, a person or entity that has cargo to be transported around the Australian coast, to apply for such a licence.

Subclause 28(2) specifies information that must be included in an application for a temporary licence. Amongst this information is the number of voyages proposed to be conducted in the 12 month period of the temporary licence. The minimum number of voyages in relation to which an application may be made for a temporary licence is five.

Items 2 and 3 of the amendments to the Coastal Trading Bill moved by the Shadow Minister for Infrastructure and Transport, propose that the information required under this section only be required to be provided to the extent that it is known to the applicant and that there be no minimum number of voyages required.[47]  Again, these proposals reflect concerns raised by industry stakeholders in submissions to the House of Representatives Standing Committee on Infrastructure and Communications inquiry into the shipping reform Bills.[48]     

Clause 30 requires the Minister to publish non-sensitive and non commercial-in-confidence details of such an application on the Department’s website within two business days of its receipt.

The Minister must also cause the following persons to be notified of an application for temporary licence, within two business days of its receipt:

  • every holder of a general coastal shipping licence and
  • any body or organisation that the Minster considers would be directly affected, or whose members would be directly affected, if the application was granted.

Clause 31 provides that the holder of a general licence may give the Minister a written notice stating that some, or all, of the sea transport task proposed in the application for a temporary licence could be undertaken by the general licence holder’s vessel. This notice must be provided within two business days after the day the application is published on the Department’s website under clause 30, above. Such a notice is called a ‘notice in response’.

Clause 32 requires the Minister to give a copy of any notice in response to the temporary licence applicant as soon as practicable after the ending of the two‑day period mentioned in clause 31.

Subclauses 32(2), (3) and (4) require the applicant to undertake negotiations with the general licence holder(s) who gave a notice in response. These negotiations must deal with whether the general licence holder’s vessel could undertake the sea transport task in question in a timely manner, taking into account the shipper’s requirements. The Minister must be notified of the results of these negotiations.

Clause 33 allows comments to be made to the Minister on an application for a temporary coastal licence, within two business days of the publication of the application under clause 30 by:

  • a person (other than a general licence holder) who would be directly affected or
  • a body or organisation that would be directly affected, or whose members would be directly affected

if the application was, or was not, granted.

Under clause 34 the Minister may take a range of matters into account when deciding whether to grant or refuse an application. The Minister must make a decision within 15 business days of the application for a temporary licence being made.

The grant of a temporary licence is for 12 months and must be published on the Department’s website under clause 35, along with the relevant information on the number of voyages to be made, the cargo or passengers to be carried, ports to be visited and any other matter prescribed by the regulations.

Clause 39 allows the Minister to refuse an application for a temporary licence, and requires the applicant to be notified of that decision, plus the reasons for it, as soon as practicable. This decision must be published on the Department’s website.

Clause 40 imposes the following conditions on all temporary licences:

  • vessels must be registered in the Australian International Shipping Register, or under a law of a foreign country
  • a copy of the licence must be conspicuously displayed on the vessel
  • the conditions imposed under clause 37 (specifying the matters addressed in every temporary licence) must be adhered to
  • the Secretary must be notified if, and why, a voyage authorised by the licence is not going to be undertaken[49]
  • the voyage notification requirements in clause 61 must be met
  • the reporting requirements of clause 62 must be met and
  • any other requirements prescribed by regulations must be met.

Clause 41 allows the Minister to impose additional conditions on a temporary licence, or vary, or remove such conditions at any time.

Clause 43 allows a holder of a temporary licence to apply to vary matters authorised by that licence. An amendment to subclause 43(1), proposed at item 10 of the Government amendments to the Coastal Trading Bill, provides that a variation does not need to be sought in relation to an authorised voyage that is not undertaken, if the Secretary has been notified that the voyage will not be undertaken, as required under proposed paragraph 40(ca) of the Bill.

If the requested variation does not relate to an energy security situation (as defined at subclause 6(1A) of the Bill and discussed below) the Minister must make a decision on the application within two days of its receipt (revised subclause 46(4), inserted by item 14 of the Government amendments to the Coastal Trading Bill).

Under clause 45 of the Bill, the Minister must also cause the following persons to be notified of an application for a variation of a temporary licence (other than an application that relates to an energy security situation) within 24 hours of its receipt:

  • every holder of a general coastal shipping licence and
  • any body or organisation that the Minster considers would be directly affected, or whose members would be directly affected, if the application was granted.

In contrast to the general arrangements, if the Minister receives an application for a variation to a temporary licence based on an energy security situation he or she must make a decision on the application within 24 hours of its receipt (revised subclause 46(4), inserted by item 14 of the Government amendments to the Coastal Trading Bill) and does not need to consult on the application (clause 45 as amended by item 13 of the Government amendments to the Coastal Trading Bill).   

In addition, under proposed clause 47A of the Bill, inserted by item 15 of the Government amendments to the Coastal Trading Bill, if the Minister has not made a decision on a variation application that relates to an energy security situation within 24 hours of receiving the application, he or she is taken to have granted the variation.

The recognition, in the Government amendments to the Coastal Trading Bill, of the potential benefit of providing expedited arrangements in order to maintain Australia’s energy security, arose from submissions by representatives of the oil and petroleum industries to the House of Representatives Standing Committee on Infrastructure and Communications inquiry into the shipping reform Bills.[50]

Subdivision E of Division 2 of the Coastal Trading Bill allows the Minster to issue a show cause notice to the holder of a temporary licence, and should it be appropriate, cancel that licence.

Clause 61 requires the holder of a temporary licence to notify the Minister of specified details of any voyage under that licence, at least two days before the actual loading date.

Clause 62 imposes specified reporting requirements on the holder of a temporary licence in respect of each voyage authorised by that licence.

Division 3 – Emergency licences

Clause 64 allows the owner, charterer, master, or agent of a vessel, or a shipper, to apply for an emergency licence.  Under clause 67, these licences last for a maximum of 30 days. 

Clause 75 imposes reporting requirements for each voyage made under an emergency licence. Reports submitted under this clause must be published on the Department’s website. The Bill as introduced required a holder of an emergency licence to report to the Department after each voyage. As there are no limits to the number of voyages that may be undertaken in the maximum 30 day period of the licence, this reporting requirement had the potential to be onerous. Item 19 of the Government amendments to the Coastal Trading Bill proposes a change to subclause 75(2) to provide that the holder of an emergency licence must only make one report, which must be given to the Department within 10 days of the end of the licence period.

There are two significant differences in the procedures for granting an emergency licence and granting a temporary licence:

  • the granting of an emergency licence is not subject to consultation with holders of a general licence and
  • such applications must generally be decided within three business days (compared to two business days for a temporary licence hat does not relate to an energy security situation).

Part 5—Enforcement

Part 5 of the Coastal Trading Bill contains provisions that facilitate the enforcement of the requirements of the Act. The enforcement powers are:

  • the power of authorised persons to require a person to give information or produce a document or thing (clauses 79 to 82)
  • the power of the Secretary of the Department to apply to the Federal Court or the Federal Magistrates Court for an order against a person alleged to have contravened a civil penalty provision (clauses 86 to 92) and
  • the power of authorised persons to investigate suspected contraventions of the legislation, seek information and require production of documents and to issue infringement notices (clause 79).

The reader is referred to the Explanatory Memorandum, pages 39 to 47 for further detail.

Part 6—Miscellaneous

Clause 107 of the Coastal Trading Bill allows certain decisions to be reviewed by the Administrative Appeals Tribunal (AAT):

  • a refusal, under clause 11, to exempt a particular vessel or a particular person from the operation of the proposed Act
  • a decision to grant an exemption under clause 11 subject to conditions
  • a refusal to make a declaration under clause 12 in relation to a vessel
  • the cancellation of a general licence under clause 25
  • a refusal to issue a temporary licence under clause 39
  • a refusal to vary a temporary licence under clause 58
  • the cancellation of a temporary licence under clause 59 and
  • the holder of a general licence who gave the Minister a notice in response to an application for a temporary licence may seek an AAT review of the Minister’s decision to grant or vary a temporary licence.

Such applications must be made within a 20 business day period after the day the person is notified of the Minister’s decision.

Clause 113 gives the Governor-General the power to make regulations related to this proposed Act.

Key provisions—Consequential Amendments Bill

Schedule 1 – Consequential amendments

Item 5 of Schedule 1 of the Consequential Amendments Bill repeals existing Part VI of the Navigation Act 1912. The provisions of the Coastal Trading Bill will replace this part.

Item 13 of Schedule 1 of the Bill inserts subsection 6(3A) into the Occupational Health and Safety (Maritime Industry) Act 1993 (OHS(MI) Act). The effect is to apply the provisions of that Act to Australian-registered ships engaged in coastal trading under a general, temporary or emergency licence.  As is the current arrangement under the Navigation Act, foreign-registered vessels engaging in coastal trading under a temporary or emergency licence will not be subject to the OHS(MI) Act.  

Government amendments insert item 19A into Schedule 1 of the Consequential Amendments Bill.[51] This item proposes to insert a note at the end of subsection 19(1) of the Seafarers Rehabilitation and Compensation Act 1992 (Seafarers Rehabilitation Act) to clarify that that Act does not apply to a vessel that is registered on the Australian International Shipping Register, regardless of where the vessel is located.  This is set out in proposed paragraph 61AA(b) of the Shipping Registration Act 1981, to be inserted by item 13 of Schedule 2 of the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012, which is currently before Parliament.     

Item 20 of Schedule 1 of the Consequential Amendments Bill, as amended by the Government amendments to the Bill, inserts proposed subsection 19(1AA) into the Seafarers Rehabilitation Act.  This provision would apply that Act to vessels engaged in the coastal trade under:

  • a general licence or
  • an emergency licence, if that vessel is registered on the Australian General Shipping Register.

At first sight the distinction between vessels on the Australian General Register and the Australian International Register in relation to the application of the Seafarers Rehabilitation Act appears curious. Ships on both registers contribute to/ are participants in the Australian economy and as such it may be appropriate for them to be subject to Australian working conditions.

Further, vessels working the coastal trade under a temporary licence are part of the Australian domestic economy and, as mentioned above, are subject to the Fair Work Act 2009. Their exemption from the provisions of the Seafarers Rehabilitation Act while working on the coast seems strange in the light of the application of the Fair Work Act to their coastal operations.

As noted above, the Australian International Shipping Register is to be established by the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012. Item 25 of that Bill notes that the objects of the International Shipping Register are to facilitate Australian participation in the international shipping trade and to provide an internationally competitive register to facilitate the long term growth of the Australian shipping industry. An exemption from the provisions of the Seafarers Rehabilitation Act for a vessel on the International Shipping Register that is engaged in the coastal trade is, no doubt, part of an attempt to establish a more competitive register.

Item 34 of the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012 also notes that one of the conditions of a vessel being placed on the International Shipping Register is that both the master and chief engineer of such a vessel must be Australian nationals or residents. This may mean that at least two Australian seafarers, employed on a vessel registered in the Australian International Shipping Register, would not be subject to the provision of the main Act covering the rehabilitation and compensation of other Australian seafarers, whilst engaged in the Australian coastal trade. This is stranger still considering that the Minister has recently stated that all crew members on vessels will be subject to the provisions of the Fair Work Act 2009.[52]

These two latter points noted, it may be a difficult exercise to apply the provision of Seafarers Rehabilitation Act to a vessel in the coastal trade as part of a much longer international voyage, especially if only two of the crew (the Master and the Chief Engineer) were involved.

The issue of the appropriateness of exempting vessels registered on the International Shipping Register, even when they are engaged in coastal trading, was raised in submissions to the House of Representatives Standing Committee on Infrastructure and Communications inquiry into the shipping reform Bills.[53] Responding to these issues, the Department acknowledged that:

... as currently drafted, there is a potential gap in insurance protection for crew employed on ships registered in the International Register while engaged in intra-State or coastal trading. The policy intent was that crew employed on ships in these circumstances would be covered by relevant State and Territory workers’ compensation. However, given the need to establish a link with a State or Territory (such as having an office in that State or Territory), this protection could prove limited.

The Department is preparing advice to Government on how best to address this matter.[54]      

Schedule 2—Continuation of existing permits, licences and declarations et cetera

Part 2 – Permits to continue in force

Items 2, 3 and 4 of Schedule 2 of the Consequential Amendments Bill allow shipping licences, Continuing Voyage Permits (CVPs), Single Voyage Permits (SVPs) and declarations issued or made under Part VI of the Navigation Act 1912 to continue to be in force for a four month period after the commencement of the new law[55] or until the expiry date, whichever is sooner.

Items 5, 6 and 7 of Schedule 2 of the Bill allow any pending applications for shipping licences and permits to continue to be processed and decided under the Navigation Act.   The licence or permit may only be granted for a maximum period of three months.

Part 3 – Licences to continue in force

Under the provisions of this Part of the Consequential Amendments Bill, the holder of a licence for a foreign-registered vessel that is continuing in force under item 3 of Schedule 2 of the Bill (see above) may apply for a transitional general shipping licence.

Part 4 – Declarations to continue in force

Item 17 of Schedule 2 of the Consequential Amendments Bill allows the provisions for the review of any decisions made under Part VI of the Navigation Act to continue once the new law commences operation. That is, people affected by a decision of the Minister under the Navigation Act retain the appeal rights they possessed under that Act.

Part 5 - Miscellaneous

Item 21 of Schedule 2 of the Consequential Amendments Bill allows the Governor-General to make regulations for the purposes of that Schedule.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.



[1].       Department of Infrastructure and Transport, ‘Shipping reform launch’, Department of Infrastructure and Transport website, 17 January 2012, viewed 11 March 2012, http://www.infrastructure.gov.au/maritime/shipping_reform/launch.aspx

[2].       Shipping Registration Amendment (Australian International Shipping Register) Bill 2012, viewed 7 June 2012,         http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr4786%22

[3].           Shipping Reform (Tax Incentives) Bill 2012, viewed 7 June 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr4788%22

[4].       Tax Laws Amendment (Shipping Reform) Bill 2012, viewed 7 June 2012,        http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr4787%22

[5].       L Nielson and M Brennan, Shipping Reform (Tax Incentives) Bill 2012 [and] Tax Laws Amendment (Shipping Reform) Bill 2012, Bills Digest, no. 146, 2011-12, Parliamentary Library, Canberra, 2012, viewed 7 June 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillsdgs%2F1695793%22

[6].       Department of Infrastructure and Transport, Bureau of Infrastructure, Transport and Regional Economics, Australian sea freight 2009–10, Canberra, 2011, p. 2, viewed 11 April 2012, http://www.bitre.gov.au/publications/2011/files/asf_2009_10.pdf

[7].       Ibid.

[8].       Ibid., p. 15.

[9].       Ibid., p. 22.

[10].      Ibid., p. 22.

[11].      Sugar Australia, Submission to the Department of Infrastructure and Transport on the Exposure Drafts of the Coastal Trading Bill and Coastal Trading (Consequential Amendments and Transitional Provisions) Bill, 24 January 2012, viewed 12 April 2012, http://www.infrastructure.gov.au/maritime/shipping_reform/coastal_trading_submissions/files/sugar_australia.pdf

[12].      Part VI of the Navigation Act

[13].      Subsection 288(3) of the Navigation Act.      

[14].      Section 286 of the Navigation Act.

[15].      Department of Infrastructure and Transport, ‘Coasting trade licences and permits’, Department of Infrastructure and Transport website, 17 January 2012, viewed 11 April 2012, http://www.infrastructure.gov.au/maritime/freight/licences/index.aspx

[16].      Department of Infrastructure and Transport, Bureau of Infrastructure, Transport and Regional Economics, Australian sea freight 2009–10, op. cit., p. 2.

[17].      These regulations cite sections 32 and 33 of the Fair Work Act 2009 as the basis for this action. Section 32 of the Fair Work Act 2009 allows regulations to be made that apply the provisions of this Act to activities occurring in Australia’s territorial sea, amongst other areas.

[18].      A Albanese, ‘Second reading speech: Coastal Trading (Revitalising Australian Shipping) Bill 2012’, House of Representatives, Debates, 22 March 2012, p. 3933, viewed 12 April 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2F843adba4-b07b-4642-9c44-98beb898a1b5%2F0010%22

[19].      Department of Infrastructure and Transport, ‘Shipping reform’, Department of Infrastructure and Transport website, 19 March 2012, viewed 2 April 2012, http://www.infrastructure.gov.au/maritime/shipping_reform/index.aspx

[20].      Department of Infrastructure and Transport, Submissions on exposure drafts of Bills, 20 March 2012, viewed 12 April 2012, http://www.infrastructure.gov.au/maritime/shipping_reform/exposure_drafts_submissions/index.aspx and Coastal trading submissions, website, 14 February 2012, viewed 12 April 2012, http://www.infrastructure.gov.au/maritime/shipping_reform/coastal_trading_submissions/index.aspx

[21].      A Albanese (Minister for Infrastructure and Transport), Major reforms to shipping industry announced, media release, AA169/2011, 9 September 2011, viewed 29 March 2012, http://www.minister.infrastructure.gov.au/aa/releases/2011/September/AA169_2011.aspx

[22].      Senate Economics Legislation Committee, Inquiry into the Coastal Trading (Revitalising Australian Shipping) Bill 2012 [and related Bills], viewed 7 June 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=economics_ctte/coastal_trading_bills_2012/index.htm

[23].      Senate Education, Employment and Workplace Relations Legislation Committee, Coastal Trading (Revitalising Australian Shipping) Bill 2012 and related Bills [Provisions], Report, 24 April 2012, viewed 7 June 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=eet_ctte/shipping/report/index.htm

[24].      House of Representatives Standing Committee on Infrastructure and Communications, Advisory Report on Bills referred 22 March 2012 (Shipping Reforms), House of Representatives, May 2012, viewed 31 May 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=ic/shipping/report.htm

[25].      Coalition members, Dissenting report, House of Representatives Standing Committee on Infrastructure and Communications, Advisory Report on Bills referred 22 March 2012 (Shipping Reforms), op. cit., pp. 51-53.

[26].      W Truss (Shadow Minister for Infrastructure and Transport) and S Mirabella (Shadow Minister for Innovation, Industry and Science), Labor full steam with a shipload of pain, joint media release, Canberra, 14 March 2012, viewed 11 April 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2F1497125%22and W Truss (Shadow Minister for Infrastructure and Transport), Union protectionism sinks shipping reform proposals, media release, Canberra, 2 December 2010, viewed 2 April 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2F405101%22

[27].      D Kitney and A Hepworth, ‘Row over cutbacks for foreign ships’, The Weekend Australian, 17 March 2012, p. 25, reporting the views of Senator Sinodinos, viewed 2 April 2012, http://parlinfo/parlInfo/download/media/pressclp/1504257/upload_binary/1504257.pdf;fileType=application/pdf#search=%22Shipping%20reform%22

[28].      Australian Industry Group, Coastal Trading (Revitalising Australian Shipping) Bill 2012 [and] Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012, submission, 6 March 2012, viewed 11 April 2012, http://www.aigroup.com.au/portal/binary/com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/LIVE_CONTENT/Policy%2520and%2520Representation/Submissions/Workplace%2520Relations/2012/Letter_Shipping_Reforms_March%25202012_Final.pdf

[29].      CSR Limited, Coastal Trading Bill [and] Coastal Trading (Consequential Amendments and Transitional Provisions) Bill (comments on first exposure draft), 31 January 2012, viewed 12 April 2012, http://www.infrastructure.gov.au/maritime/shipping_reform/coastal_trading_submissions/files/csr.pdf

[30].      National Bulk Commodities Group, Coastal Trading Bill 2012 [and] Coastal Trading (Consequential Amendments and Transitional Provisions) Bill 2012, Submission to the Department of Infrastructure and Transport (in respect of the first exposure draft of these Bills), 30 January 2012, viewed 11 April 2012, http://www.infrastructure.gov.au/maritime/shipping_reform/coastal_trading_submissions/index.aspx

[31].      Cement Industry Federation, Response to the exposure draft of the Coastal Trading Bill 2012 (comments on the first exposure draft), January 2012, viewed 12 April 2012, http://www.infrastructure.gov.au/maritime/shipping_reform/coastal_trading_submissions/index.aspx

[32].      A Hepworth, ‘Shipping tax break to cost budget $255m’, The Australian, 23 March 2012, p. 21, viewed 11 April 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressclp%2F1516016%22 

[33].      Business Council of Australia, Submission to the Department of Infrastructure and Transport on the exposure draft of the Coastal Trading Bill 2012 (that is the first exposure draft), February 2012, p. 2, viewed 11 April 2012, http://www.infrastructure.gov.au/maritime/shipping_reform/coastal_trading_submissions/files/bca.pdf

[34].      Australian Shipowners Association, Shipowners welcome introduction of Bills, media release, 22 March 2012, viewed 11 April 2012, http://www.asa.com.au/?media-release=shipowners-welcome-introduction-of-bills

[35].      Australian Shipowners Association, ASA concern over Access Economics report, media release, 14 March 2012, viewed 11 April 2012, http://www.asa.com.au/?media-release=asa-concern-over-access-economics-report

[36].      F Anderson, ‘Tax breaks to spark $4bn spend’, The Australian Financial Review, 8 March 2012, p. 20, viewed 11 April 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressclp%2F1482632%22 

[37].      Sugar Australia, Coastal Trading Bill [and] Coastal Trading (Consequential Amendments and Transitional Provisions) Bill (comments on first exposure draft), 24 January 2012, viewed 12 April 2012, http://www.infrastructure.gov.au/maritime/shipping_reform/coastal_trading_submissions/files/sugar_australia.pdf

[38].      Explanatory Memorandum, Coastal Trading (Revitalising Australian Shipping) Bill 2012, p. 5, viewed 14 June 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr4784_ems_0a2721e6-94b2-46b8-9ac0-434c386146f4%22;rec=0  and Explanatory Memorandum, Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012, p. 3, viewed 14 June 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr4782_ems_f46e830a-e108-4e36-9c05-6154c150563f%22;rec=0.

[39].      W Truss, Amendments to the Coastal Trading (Revitalising Australian Shipping) Bill 2012, viewed 15 June 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Famend%2Fr4784_amend_7d7eac80-0060-43ac-ade0-3918abf6ab56%22

[40].      House of Representatives Standing Committee on Infrastructure and Communications, Advisory Report on Bills referred 22 March 2012 (Shipping Reforms), op. cit., pp. 19—20.

[41].      A definition of ‘liquid fuel product’ is inserted into clause 6 of the Coastal Trading Bill by item 2 of the Government amendments to the Coastal Trading (Revitalising Australian Shipping) Bill 2012, viewed 15 June 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Famend%2Fr4784_amend_8f53ed68-1b4f-4641-9b3a-59c23acb160e%22    

[42].      Ibid.    

[43].      Explanatory Memorandum, Coastal Trading (Revitalising Australian Shipping) Bill 2012, pp. 12–15.

[44].      Clause 10, Shipping Reform (Tax Incentives) Bill 2012.

[45].      ‘Business day’ is defined at clause 6 of the Bill  to be a day that is not a Saturday or a Sunday or a public holiday in the Australian Capital Territory or the 27 to 31 December of any year.

[46].      A penalty unit is currently $110 – see section 4AA of the Crimes Act 1914 (Cth).

[47].      W Truss, Amendments to the Coastal Trading (Revitalising Australian Shipping) Bill 2012, op. cit.

[48].      House of Representatives Standing Committee on Infrastructure and Communications, Advisory Report on Bills referred 22 March 2012 (Shipping Reforms), op. cit., pp. 20—25.

[49].      Proposed paragraph 40(ca) – inserted by item 9 of the Government amendments to the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012, op. cit.

[50].      House of Representatives Standing Committee on Infrastructure and Communications, Advisory Report on Bills referred 22 March 2012 (Shipping Reforms), op. cit., pp. 31—32.

[51].      Government amendments to the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012, op. cit.

[52].      A Albanese (Minister for Infrastructure and Transport), Speech to the Maritime Industry: Stronger Shipping for a Stronger Australia, (AS26/2011), Sydney, 9 September 2011, viewed 18 April 2012, http://www.minister.infrastructure.gov.au/aa/speeches/2011/AS26_2011.aspx

[53].      House of Representatives Standing Committee on Infrastructure and Communications, Advisory Report on Bills referred 22 March 2012 (Shipping Reforms), op. cit., pp. 34‑35.

[54].      Ibid., p. 35.

[55].      That is, the Coastal Trading (Revitalising Australian Shipping) Act 2012.

For copyright reasons some linked items are only available to members of Parliament. 

 


 

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