Dissenting Report— Mr Paul
Neville MP, Mr Paul Fletcher MP, Mrs Jane Prentice MP
have considered the five “shipping reform” bills introduced into the House of
Representatives by the Minister for Infrastructure and Transport on 22 March 2012.
The House should
not pass these bills. 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
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.
Significant cost increase to users
of coastal shipping
At the core of
the New Scheme is a new licensing regime for coastal shipping in Australia.
Today, there is a system in which non-Australian registered ships can be
granted permits to operate single and continuous voyages in Australian coastal
waters. This is to be replaced with a new regime under which Australian
flagged vessels will have unrestricted access to coastal trade; and foreign
vessels can be granted a year long “Temporary Licence” to operate.
vessels operating on single and continuous voyage permits make up about thirty
per cent of domestic coastal shipping. Clearly, changes to the permit
system have the potential to impact on shipping costs.
Economics prepared a report on the likely impact of the New Scheme, on behalf
of the Cement Industry Federation and industries reliant on bulk sea freight.
It predicts that the New Scheme will increase shipping costs and freight rates
by up to 16 per cent.
The key source of
cost increases is the reduction in competition. The New Scheme requires
parties seeking a Temporary Licence to carry out a minimum of five voyages in
the year.This excludes from the market
suppliers wishing to carry out, for example, a single coastal voyage (perhaps
as part of a longer voyage from a foreign country, to Australia, and back.) It
also imposes a significant compliance burden, as those seeking a Temporary
Licence are required to give details about their planned voyages.
There is no good
reason for imposing these prescriptive regulatory requirements. This is a
protectionist measure which will reduce competition. It serves the interests
of the Maritime Union of Australia and other unions. It harms the interests of
users of coastal shipping services and imposes a burden on the economy more
Claimed benefits depend on compact
with MUA which has not been agreed
claims the New Scheme will deliver productivity improvements in the coastal
shipping industry. In fact the improvements depend on yet to be concluded
negotiations with notoriously militant unions such as the MUA.
The Minister said
in his second reading speech:
We are committed
to aligning Australian productivity practices with the best in the world. To do
this, we will need a compact between industry and unions.This compact must include
changes to work practices, a review of safe manning levels and the use of
riding gangs on coastal vessels. This compact is essential to the reform
agenda. Negotiations between industry and the unions are progressing.
In asking the
Parliament to pass these bills making up the New Scheme, when no compact is in
place, the Gillard Government is effectively saying, ‘trust us – we’ll achieve
these improvements.’ We know this government’s track record; we do not trust
them; we strongly doubt that any productivity improvements will be secured. If
the government actually had a signed deal to put before us, we would review it
and form a view as to its merits. In the absence of an agreement, we reject
the government’s assurances.
Unlikely to revitalise the
Australian shipping industry
objective of the New Scheme is to revitalise the Australian shipping industry.
The government has failed to demonstrate how the New Scheme will achieve this.
protectionist legislation often justify it as boosting domestic industry.
Experience teaches us that such legislation usually delivers higher costs and
lower productivity. It produces a flabby and inefficient industry unable to
compete in world markets, and imposes a significant cost burden on the rest of
the domestic economy as a result. In our view, that will be the consequence of
the New Scheme.
Paul Neville MP
Jane Prentice MP
Paul Fletcher MP
May 23 2012