Coalition Senators' Dissenting Report
The Coalition strongly supports Australia’s shipping industry and
recognises that coastal shipping is integral to Australia’s freight network.
Coalition Senators support constructive measures to revitalise the shipping
industry and increase the number of Australian flagged vessels, with dwindling
numbers currently standing at only 22 ships. However, after consideration of
the government’s five shipping reform bills, we are concerned that these bills
will fail to meet their proposed objective of revitalising the Australian
coastal shipping industry.
The recommendations made by the Committee do not adequately address
additional issues raised by stakeholders at the hearing. Further flaws are
highlighted below that have not been addressed in the Committee’s
Significant increase in costs and
regulatory burden for users of coastal shipping
A number of submitters to the inquiry expressed concern over the level
of additional expense and red tape that will be imposed on the coastal shipping
industry as a result of these bills, with a particular focus on the proposed
three tier licensing regime. Many labelled the proposal as inflexible and
As the current system stands, non-Australian flagged vessels can be
granted permits to operate single and continuous voyages in Australian coastal
waters. Under the proposed regime, Australian flagged vessels will have
unrestricted access to coastal trade; and foreign vessels can be granted a
year-long temporary licence to operate.
According to a report prepared by Deloitte Access Economics, which was
commissioned by the Cement Industry Federation, foreign vessels operating on
single and continuous voyage permits make up about thirty per cent of coastal
This report also found that the new scheme will increase shipping costs and
freight rates by up to 16 per cent.
In its submission, Sucrogen Australia Pty Ltd stated that an increase in
the cost of coastal shipping would force offshore trading within the molasses
Other submitters gave similar evidence that this suite of bills would impose
significant downstream economic impacts on industries reliant on coastal
shipping trade, which will have a detrimental impact at a time when the
Australian manufacturing industry is struggling with the high Australian
dollar, weaker global demand and the imminent Carbon Tax.
The proposed scheme also requires parties seeking a Temporary Licence to
carry out a minimum of five voyages per year.
Caltex argued that the minimum voyage requirement is not practical or
reasonable and suggested that this could reduce transparency within the
industry, by encouraging shippers to include bogus voyages in their
applications to meet the licensing requirements.
Representatives from seasonal industries such as the Fertiliser Industry
Federation of Australia gave evidence to the Committee that the proposed three
tier licensing regime would not provide the industry with the necessary
flexibility required to transport seasonally demanded goods.
Submitters from the fuel industry also expressed concern over the
inflexibility of the proposed licensing system, stating that it will impact the
security of Australia’s fuel supply:
It is critical the hydrocarbon sector is able to quickly
divert cargos to meet changing supply and demand levels to maintain Australia’s
energy security. These occurrences may take place within a 24 hour period after
a vessel has departed and the Bill currently has no provision for meeting this
Coalition Senators are concerned that the proposed licensing scheme will
prove costly and burdensome for industry, with the consequence being higher
costs and reduced competition and transparency for both the shipping industry
and manufacturers and producers.
The Bills will fail to revitalise
the Australian shipping industry
The Government has stated that the purpose of the new scheme is to revitalise
the Australian shipping industry by stimulating growth in the number of
Australian ships on our coast and maximise the use of Australian flagged
vessels, however Labor has failed to demonstrate how the new scheme will
It is of particular concern to Coalition Senators that officials in
attendance at the hearing from the Department of Infrastructure and Transport
avoided confirming that the bills will actually revitalise the Australian
shipping industry and preferred to refer to the bills as "a good
stating that they expected "some" pick up in the industry.
Coalition Senators recognise the Committee’s positive recommendations
that an independent body be established to monitor the progress of the bills
and that the compact between industry and unions is finalised before the suite
of shipping reform bills are proclaimed. However, these recommendations do not
address the higher costs and regulatory burden these bills are likely to impose
on industry, nor do they go far enough to address the need for a root and
branch review of coastal shipping practices in Australia, which we believe can
only be effectively achieved through referral to the Productivity Commission.
Based on the reasons outlined above, Coalition Senators recommend that the
Senate does not pass these bills.
That the Senate does not pass these bills.
That a Productivity Commission inquiry be undertaken in relation to
coastal shipping in Australia.
Senator David Bushby
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