Australian shipping reviews and regulations
This chapter examines previous reviews and reports into Australian
shipping, and the findings of those reports. The chapter considers the 1992 and
1995 Ships of Shame reports into ship safety, and the 2008 inquiry into
the revitalisation of the Australian coastal shipping industry.
The chapter discusses the legislation governing the movement of vessels
in Australian waters, primarily the Coastal Trading (Revitalising Australian
Shipping) Act 2012 and considers the efficacy of the general and temporary
The chapter also considers the wages paid to international seafarers,
how the Fair Work Act 2009 applies to maritime crew on FOCs, and the
welfare services available to Australian and international seafarers.
Maritime Labour Convention
The Maritime Labour Convention 2006 (MLC) is an international convention
developed under the International Labour Organization (ILO), and ratified by
Australia in December 2011. The MLC determines the working rights and living
conditions for seafarers at sea, on public or private commercial vessels. It
aims to 'achieve decent work arrangements for seafarers and secure economic
interests in fair competition for quality shipowners'.
The MLC contains five main subject areas:
Minimum requirements for seafarers to work on vessels: sets
minimum age requirements, health and training conditions and the regulation and
audit of seafarer recruitment and placement services;
Conditions of employment: determines minimum requirements in
relation to wages, hours of work and rest, leave, compensation and access to
Accommodation, recreational facilities, food and catering:
relates to on‑board living conditions and standards, including room
sizes, heating and cooling, laundry and sanitary facilities, and hospital
Health protection, medical care, welfare and social security
protection: to ensure the prompt access to medical care on‑board,
including dental care, by appropriately trained personnel, and access to shore‑based
welfare facilities; and
Compliance and enforcement: details flag state responsibilities
for implementation and enforcement, and port state responsibilities for
enforcement on foreign vessels (such as inspections, investigations and
The MLC also provides that seafarers, or their representatives, should
be given clear direction on how to make complaints about the working and living
conditions on a vessel. Owners must ensure that seafarers can make a complaint
'without recourse or concern'. Seafarers can make a complaint directly to AMSA or
any other organisation involved with seafarer welfare, and cannot have any
actions taken against them for making a complaint.
In it submission to the inquiry, the ICS argued that the standards
developed by the ILO through the MLC showed that shipping was 'the only
industry with a comprehensive framework of detailed employment regulations that
is enforced on a global and uniform basis'.
In 2016, AMSA received 133 complaints about 179 alleged breaches of the
MLC, with regards to living and working conditions on vessels. The main
category of complaint was wages, following by food and catering. AMSA advised
Of the complaints received, 52 were through the International
Transport Workers Federation (ITF), 38 directly from seafarers, 20 from various
welfare groups, 13 from government agencies and 10 from other sources.
A total of 68 complaints were substantiated, nine were forwarded
to the Fair Work Ombudsman for investigation and four were unable to be
investigated due to the vessel departing and not returning to Australian
waters. No evidence could be found to substantiate the remaining complaints.
1992 and 1995 Ships of Shame reports
FOC vessels in Australian waters were first seriously considered by the
House of Representatives Standing Committee on Transport, Communications and
Infrastructure, in its 1992 report Ships of Shame: Inquiry into Ship Safety.
This was followed by the same committee's follow‑up report in 1995, Ships
of Shame: A Sequel.
The 1992 report was triggered by the loss of six bulk carriers off the
coast of Western Australia between January 1990 and August 1991, with increased
awareness during the inquiry that the loss of bulk carriers was a significant
problem. The report focused on the minority of foreign ships that endangered
the lives of all crew on board, as well as the environment and the marine
facilities in the countries they visited.
The Ships of Shame inquiry heard evidence of:
unseaworthy ships in operation;
the use of poorly trained crews, some with false qualification
flag states failing to carry out their responsibilities under
international maritime conventions;
inadequate, deficient and poorly maintained safety and rescue
equipment, and seafarers being denied medical treatment;
beatings of sailors by ships' officers, sexual abuse of young
sailors and crews being starved of food;
crew being forced to sign false statements indicating a higher
rate of pay than actually received, and crew being forced to work excessive
overtime hours for no pay; and
seafarers not being paid for several months and/or remittances
not being made to families at home.
The inquiry found that this and other evidence came as no surprise to
industry participants, who all seemed aware that such events were occurring. Yet
'almost no one was trying to assist the unfortunate seafarers', with the
exception of seafarer unions and the Missions to Seamen. However, their 'limited
efforts were hampered by threats of seafarers being blacklisted and intimidated
by crewing agencies, ship officers, managers, owners and operators'.
The 1992 report presented a number of recommendations, that were aimed
reduce the level of risk to which the lives of seafarers, the
Australian marine environment and property were subject to;
improve the level of compliance with international convention
standards by flag states, ship owners and managers; and
improve the efficiency and effectiveness of the ship safety
regulatory regime both internationally and in Australia.
The Ships of Shame reports, and an additional progress report
completed in 1994, were considered by the committee's May 2016 interim report,
as was evidence received by the committee as to the progress made since the
1992 and 1995 reports. The interim report detailed a number of positive
developments that had been made, including the International Safety Management
Code, the Port State control system, the 2006 MLC and improved monitoring of
and communication with foreign vessels in Australian waters.
However, the committee went on to note the continued areas of concern
with regards to the operation of FOC vessels, including new issues that have
arisen since the reports of the early 1990's. Some matters raised by Ships
of Shame do not appear to have been rectified and in some instances are
just as bad, as use of flags of convenience has become more prevalent.
2008 inquiry into rebuilding Australia's coastal shipping industry
In October 2008, the House of Representatives Standing Committee on
Infrastructure, Transport, Regional Development & Local Government tabled
its report, Rebuilding Australia's Coastal Shipping Industry: Inquiry into
coastal shipping policy and regulation (the shipping inquiry).
The inquiry identified an increase in foreign‑flagged vessels, a
'skills crisis' and port infrastructure as key issues directly impacting the
growth of the Australian coastal shipping industry, alongside a growth in freight
movements by road and rail, but not shipping. For shipping to increase its
share of the national freight task, it would need to become more competitive
when compared with rail and roads.
Evidence reviewed by that shipping inquiry found that a number of
developed countries, particularly in Europe, had taken steps to address the
decline in their shipping fleets. The fiscal incentives and measures taken by
these countries included favourable tax regimes for ship‑owners, cost‑offsets
in employing domestic seafarers and the encouragement of training and career
The shipping inquiry acknowledged that many recommendations had already
been made, primarily by industry stakeholders, to reform the maritime sector.
However, it noted that 'much of the hard work and analysis required to reform
Australia's shipping policy and regulation has been completed without a clearly
articulated policy'. Government announcements made in 2008 about fostering a
viable shipping industry went some way to develop policy, and the shipping
inquiry also made a number of recommendations to guide a new policy framework
for coastal shipping.
The shipping inquiry recommended the establishment of a single, national
maritime training authority, to help attract and retain new seafarers, address
the prohibitive cost of maritime training and to harmonise the disparate
training standards found across Australian jurisdictions.
Overall, the shipping inquiry found that:
The strongest argument for revitalising Australia’s coastal shipping
industry is an economic one. A strong domestic shipping industry can assist in
the alleviation of land transport bottlenecks, infrastructure constraints and
environmental impacts, as well as provide economic benefits derived from the
creation of local employment and the growth of maritime services. Australian
defence, maritime safety and security could also benefit from an expanded
coastal shipping sector.
As a result of the shipping inquiry's recommendations, a Shipping Policy
Advisory Group was established in 2009, comprising of union and industry
representatives. In 2010, this Group provided advice on how to implement the
shipping inquiry's recommendations, via its report Reforming Australia's
Shipping – A Discussion Paper for Stakeholder Consultation. Following this,
between February and May 2011, three industry reference groups met and advised
on key reform areas.
Coastal Trading (Revitalising Australian Shipping) Act 2012
In 2012, the then Minister for Infrastructure and Transport, the Hon
Anthony Albanese MP, introduced a suite of legislation aimed at revitalising
the Australian shipping industry, as part of the 'Stronger Shipping for a
Stronger Economy' package. The package included the Coastal Trading
(Revitalising Australian Shipping) Act 2012 (the CT Act). The CT Act sought
to regulate the operation of vessels in Australian waters and carrying cargo
between Australian ports, updating outdated provisions of the Navigation Act
1912. Its primary purpose was to promote a viable local
shipping industry and its long‑term growth, by maximising the use of
The CT Act established the Australian General Shipping Register, for
domestic vessels and Australian vessels with international certification to
have access to the coastal trade. It also established the Australian
International Shipping Register (AISR), for ships engaged in international
trade and who meet specific criteria, in order to 'put Australian companies on level
footing with their international competitors'.
Prior to the implementation of the CT Act, vessels operated in
Australian waters under a permit system. The CT Act replaced the permit system with
a three‑tiered licence system:
General licences: for Australian-flagged vessels to have
unrestricted access to coastal trade, and access to various tax incentives;
Temporary licences: for foreign‑flagged vessels or vessels
registered under the AISR to have restricted access to coastal trade; and
Emergency licences: to provide restricted coastal access in
response to major emergencies and natural disasters.
Foreign vessels can apply for temporary licences, but this may be
subject to negotiation with general licence holders. General licence holders
are all notified of a temporary licence application and have the right to
respond and negotiate or compete for the transport of the cargo as proposed by
the foreign vessel.
As with the legislation in place prior to the CT Act, this allows
operators of foreign registered vessels to 'apply for a permit to carry
Australian domestic cargo and passengers on the basis that there is no licenced
vessel available [or] adequate', and it is in the public interest to allow the
This 'notice and response' process between general and temporary licence
holders was explained further by the department. Ms Judith Zielke, of DIRD,
currently, each time a [foreign or ASIR] ship wants to carry
goods, that voyage—no matter what the circumstance—is advertised to all general
licence holders, even when we are aware that they do not actually have any
ships that could carry those goods.
In looking at coastal shipping reform, DIRD has suggested streamlining
this licence process. Reforms would remove the need to consult general licence
holders, if there are no general licence holders who wish to be consulted or
are able to carry the product. For example, consultation is currently still
required on all applications for temporary licences to carry fuel, despite
knowing 'there are no Australian flagged vessels capable of carrying petroleum
Ms Zielke further explained that:
In effect, we are undertaking a step in the process where we
know that there is no Australian ship to carry those goods. [The reforms] would—only
in the circumstances where we know that there are no Australian ships to carry
those goods—remove the need for us to go out and advertise it to all of the
general licence holders.
Five voyage minimum
Temporary licences are valid for 12 months, but may be renewed or varied
an unlimited amount of times. A temporary licence can only be issued for a
minimum of five voyages, potentially requiring applicants to provide voyage
information well in advance of a voyage taking place. Any new voyages undertaken
during the period of the temporary licence requires variations to the original
licence (but any application to increase the number of voyages must have a
minimum of five voyages).
As part of Budget Estimates, the Rural and Regional Affairs and
Transport Legislation Committee (legislation committee) heard that stakeholders
were raising concerns over the minimum five voyage requirement. The OTS advised
the legislation committee that:
We have a range of stakeholders, companies, who would like to
move goods for which their needs are infrequent and therefore ships cannot
actually allocate what those five voyages will be for and therefore are unable
to apply for a [temporary] licence. We have had situations in that particular
circumstance where that has led to companies having to move goods by truck,
because they are not able to move them on a ship.
On its website, DIRD has published examples of where the five‑voyage
minimum does not work as originally intended:
For example, a piece of heavy
machinery was unable to be shipped as a single voyage and, therefore, a
Temporary Licence could not be granted. The machinery was moved by road, which
required a police escort due to the over-size load and removal of overhead power
lines. This was more complicated and costly than a voyage by ship.
As discussed later in this report, the government is looking at a number
of coastal shipping reforms, including the removal of the five voyage minimum
for temporary licences.
Wages for seafarers
It has been repeatedly argued that the current coastal shipping
regulatory environment has increased costs and administrative burdens, while
decreasing competition. The concerns around costs often involve discussion of
payment of seafarers operating in Australian waters.
The ILO has determined a minimum monthly wage for international
seafarers. The MLC provides that 'the basic pay or wages for a calendar month
of service for an able seafarer should not be less than the amount periodically
set by the [Joint Maritime Commission] or another body authorized by the
Governing Body of the ILO'.
The minimum monthly basic wage for able seafarers was set at US$592 as
of 1 January 2015, rising to US$614 as of 1 January 2016.
Ships operating in Australian waters under temporary licences must, under
certain circumstances and pursuant to the Fair Work Act 2009 (Fair Work
Act), pay Australian wages to the crew, regardless of their nationality. The
Fair Work Act applies when a foreign-flagged vessel undertakes a voyage in
Australian waters under a temporary licence and:
made at least two other voyages under either a temporary licence
or single voyage permit in the last 12 months; or
held a continuous voyage permit in the previous 15 months.
Once an FOC vessel makes at least three voyages in Australian waters, it
is required to pay award wages as specified by the law. However, temporary
licences specify a five voyage minimum. It has been noted that:
Whilst it is theoretically possible that a ship could apply
for a temporary licence and only undertake two voyages in a 12 month period
(and hence not be required to pay Australian wages), this appears unlikely to
occur on a regular basis.
Accordingly, all FOC vessels undertaking regular interstate voyages
along the Australian coast should, in theory, be paying award wages. However,
there are apparent loopholes being exploited in the CT Act to avoid proper wage
payment, and a lack of regulatory oversight verifying the wages paid in
The legislation committee brought to the attention of OTS claims that
foreign vessels with foreign crew were loading freight onto vessels in
Australian ports, leaving Australian waters and then returning after visiting
another country. OTS confirmed that under temporary licensing, vessels are:
only required to seek approval for voyages where they are
actually coming on‑coast, and actually dropping off and picking back up
again on‑coast. So yes; they can come into port, allow their passengers
to visit – noting they will have passports and those sorts of things to come
onshore – and then they can depart Australia again and continue. Our permits
and licensing system is in relation to coastal shipping – where they are
continuing around the coastline.
The committee's interim report presented evidence that FOC vessels were
using temporary licences on permanent domestic routes, and that it was possible
for vessels to leave Australian waters after two voyages to avoid paying
Australian wages from the third voyage onwards. Likewise, vessels could be
interchanged for regular voyages to ensure the three‑voyage wage
threshold was not reached.
Under current arrangements and the temporary licence scheme, there is
nothing to prevent shipping companies and operators cycling vessels and their
movements, in an attempt to avoid higher levels of regulatory scrutiny and the
payment of award wages to crew, under temporary licensing. The committee
remains concerned that this loophole continues to expose workers to substandard
conditions and wage payments, and Australia to unnecessary security risks.
Case Study – MT Turmoil
The MT Turmoil, an oil and chemical tanker flagged to Panama and
owned by Norwegian company Transpetrol, was chartered by BP and Caltex while in
Australian waters between 2013 and 2015. The ship travelled interstate between
ports in 'Perth, Adelaide, Burnie, Melbourne, Sydney, Brisbane, Darwin' and
It was alleged that the 61 workers on board, mostly from India or the
Philippines and as young as 21, were paid the equivalent of $1.25 an hour, in
addition to allowances and overtime rates. The Fair Work Ombudsman (FWO)
commenced legal action against Transpetrol, following a request for assistance
from a crew member. The FWO stated that:
Transpetrol allegedly paid the foreign crew rates that were
the equivalent of as little as $1.25/hour in relation to base rates, in
addition to industry specific allowances and overtime amounts...However, it is
alleged that under the Fair Work Act the crew were entitled to the minimum
entitlements that applied under Australia’s Seagoing Industry Award and
National Minimum Wage Order.
Transpetrol was allegedly obligated to pay 58 of the crew
minimum hourly rates of between $15.95 and $30.66 and overtime rates of between
$19.94 and $38.32 per hour under the Seagoing Industry Award.
It is alleged that the other three foreign crew members were
entitled to be paid base rates of up to $16.87/hour under the National Minimum
The underpayments to workers totalled more than $255,000. The
underpayments for individuals ranged from $374 to $10,390. It was reported that
all crew members had been back-paid in full, but the FWO decided to pursue
legal action 'because of the significant amount involved for vulnerable foreign
Fair Work Ombudsman
At Budget Estimates in May 2017, the Senate Education and Employment
Legislation Committee (employment committee) heard evidence that confirmed the
FWO actions in relation to the MT Turmoil, and its awareness that
foreign seafarers were being paid as little as $1.25 an hour. The FWO advised
that it became aware of the wage breaches after notification from a number of
However, the FWO also confirmed that although the ships were chartered
by BP and Caltex, there was no legal obligation for these two companies with
regards to workplace relations regulation; this rested with Transpetrol. And,
while the FWO may have in the past investigated vessels on an ad hoc basis, it
did 'not have a coastal shipping campaign planned' to investigate other claims
The employment committee was informed that the shipping sector does not
generate 'a lot of complaints' to the FWO, and that there was not 'some issue
to address in this sector that warrants a greater investment by [the FWO]'. The
FWO went on to state that:
There is a very strong union in that sector that is very
capable of enforcing the rights and entitlements of [workers] should they wish
to and who would support them to do that. I know that we have discussions with
the MUA about issues in their sector and other bodies that represent the
interests of the seafarers. It is something that we consider important and that
we investigate accordingly when those issues come to hand.
The case of the MT Turmoil, and the evidence provided by the FWO,
highlight the issues involved with ensuring the payment of fair and legal wages
to foreign crews, working on vessels operating under temporary licences.
In its interim report, the committee recommended that the temporary
licencing scheme be immediately tightened for FOC vessels that undertake
permanent coastal freight routes, and should therefore be paying crew
Australian award wages. The Government did not support this recommendation,
stating that the temporary licence scheme was overseen by DIRD, AMSA and the
FWO, providing 'an appropriate level of assurance' and therefore changes were
Additionally, the interim report recommended that the government
continue to work with the ILO to improve the rates of remuneration for
international seafarers. The government noted this recommendation, stating
that the government works closely with the ILO to 'ensure seafarers globally
are afforded minimum rights and conditions of employment when engaged in
international shipping'. The government also highlighted the ratification of
the MLC, the work of the MLC in providing 'fair terms of employment', and the
role of AMSA in monitoring and enforcing compliance with the MLC.
Welfare for seafarers
The committee's interim report discussed evidence that there were
insufficient support and welfare services for crew on foreign vessels, and a
lack of shore-based assistance and funding for that assistance.
A number of organisations provide assistance to seafarers through ship
visits, drop‑in centres and emergency support services. Services are also
provided to improve on‑board standards, health and wellbeing, to establish
social networks and access to financial planning, and to address issues of
isolation and depression. Organisations include the ITF Seafarers' Trust, the
Mission to Seafarers, the Australian Seafarers' Welfare Council and
Hunterlink, an Employer Assistance Provider, provides welfare services
to international seafarers visiting Australian waters, via a free, 24‑hour
counselling helpline. A team of Hunertlink employees attended the MV Sage
Sagittarius in the Port of Newcastle, following the death of Hector
Collado. A member of the team described the crew on board as intimidated, very
fearful and very distressed about the events on board. They were also fearful
at remaining on board with someone who may have participated in some way to the
deaths of their crewmates.
DIRD advised that the government does not have the capacity to ensure
the safety and wellbeing of seafarers, once they leave Australian waters.
The Merchant Navy Association advised the committee that it promotes the
welfare of serving and ex‑Merchant Navy seafarers, and seafarers
generally, through social events and memorial attendance. The Association also
All too often we receive
reports of exploitation and ill treatment of seafarers on FOC ships. It is
essential that AMSA, the ITF and the unions are allowed to continue to monitor
the safety and well being of seafarers employed on flag of convenience ships. Our
concern is that not enough support and resources are given to these
organisations to enable them to increase the scope of their inspections and
The International Seafarers' Welfare and Assistance Network (ISWAN) is
an internationally‑supported seafarer welfare association. ISWAN provides
global assistance 24 hours a day to seafarers, and administers an emergency
welfare fund for seafarers in need. ISWAN summarised the key issues with
seafarer welfare on its website:
Seafarers, who are responsible for transporting 95% of the
world's goods, are frequently overlooked and forgotten about. With the fast
turnaround of ship in ports, being on board for 10 months, reduced crew numbers
and increased workloads, the lives of seafarers are often tough and hard.
Seafarers face long periods away from family and friends with limited or no
communication for weeks on end. Shore leave can be severely restricted,
particularly for certain nationalities.
The work of these organisations and others is to be commended in
improving the wellbeing of Australian and international seafarers. However, the
ability of seafarers to access these services likely depends on the atmosphere
and working conditions on a vessel.
Additionally, and as highlighted by the committee's interim report, a
lack of ongoing financial support for these organisations make it increasingly
difficult for them to provide the necessary services to crew members in need.
Committee view and recommendations
Ships of Shame reports
The committee agrees with the evidence before it that a number of
important developments have been made in the shipping industry since the Ships
of Shame reports and in response to FOC vessels. However, the committee
remains very concerned that there continues to be new and unresolved issues
around the operation of FOC vessels in Australian waters.
It is arguable that the aims of the 1992 Ships of Shame
recommendations remain just as important today in ensuring the safety and
wellbeing of Australian and international seafarers, and in progressing
effective regulatory reforms for dealing with FOC and other vessels in
Australian waters. The evidence received by the 1992 inquiry parallels evidence
received by this committee during its current inquiries, particularly in
relation to seafarer work conditions.
In particular, the committee notes the continued occurrences of
Australian and international seafarer underpayment, insufficient training,
mistreatment and death at sea, as will be discussed later in this report. The
committee also notes the continued negative environmental impacts and security
concerns of deficient FOC vessels.
The committee heard evidence that the temporary licence scheme was open
to abuse by FOC vessels. The committee also understands that in some sectors of
the industry, the five voyage minimum was potentially introducing
administrative and cost burdens.
The committee appreciates that the licence scheme is being reviewed as
part of coastal shipping reform. The committee encourages the government to
ensure that, if any amendments are made to temporary licensing, appropriate
safeguards are provided to ensure the ongoing viability of the Australian‑flagged
shipping industry and its employees.
It will always be challenging to balance the competing interests of
different stakeholders in the industry, and to this end the committee
encourages extensive stakeholder consultation and engagement prior to any
further legislative amendments to shipping.
The committee was very concerned to hear that FOC vessels are exploiting
loopholes in the temporary licensing scheme, particularly in order to reduce
wages. Any amendments to the scheme should not further jeopardise the health,
wellbeing and remuneration of international seafarers.
Payment of seafarers
The committee has been presented with numerous examples of where foreign
seafarers have not been paid Australian award wages, despite the legal
requirements stipulating that they should be. The government's response to the
interim report stated that there is 'an appropriate level of assurance' in the
oversight of wage payments, but the evidence does not support such a claim.
While the FWO is to be commended in prosecuting the owners of the MT Turmoil
and ensuring appropriate wages were paid to the crew in full, the committee is
concerned that there is no dedicated program to review the wage conditions on
FOC vessels. The committee considers that seafarers working on vessels with
poor conditions and authoritarian management and supervision would be unlikely
to report instances of wage underpayment and mistreatment, despite workplace
protections under the MLC that should support such actions.
The committee is very concerned that there appears to be no regular
oversight of foreign vessels operating along the Australian coast, to ensure
that foreign workers in particular are paid the appropriate wages. The case of
the MT Turmoil highlights these concerns and is a new low in the
payment of seafarers, with $1.25 an hour far below what anyone would reasonably
expect employees to be paid, in any industry.
Indeed, at Budget Estimates the Minister for Employment, Senator the Hon
Michaelia Cash responded specifically to questioning over the MT Turmoil,
the government expects all employers or people who employ
Australians or all those who are employed under Australian law to comply with
the law. In the event that they do not, they should feel the full force of the
While the committee is in full agreement with the Minister, it is not
apparent to the committee that there is a clear policing of wage rates, or a
system in place for workers to report wage underpayments, or lack of payments,
to authorities. This lack of transparency makes it difficult to see how legal
action can be progressed to rectify such issues.
The committee takes the view that an ongoing program that oversights the
payment of wages on foreign vessels operating in Australia, is required as an
important step in ensuring the health and wellbeing of seafarers and their
families, and ensuring compliance with the law.
To this end, the committee recommends that the Fair Work Ombudsman
undertake such a program.
The committee recommends that the Fair Work Ombudsman implement a program
of inspection for ships with foreign seafarers, to verify that the wages paid on
board accord with Australian legal requirements.
The committee recommends that the Australian Government provide adequate
funding to the Fair Work Ombudsman to implement an inspection program of ships
with foreign crews, to assess the payment of wages.
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