Committee view and recommendations
As an island nation, shipping is central to Australia's economic health and
the maintenance of a robust national security system. The committee considers
that a healthy domestic shipping sector, of locally-owned vessels crewed by
Australians, should be an essential part of our national transport
The committee recognises that ships sailing under the flags of other
nations will inevitably play a significant role in Australia's economy, particularly
in respect of international trade. However, compelling evidence presented to
the inquiry suggested there are evolving challenges to the Australian maritime
sector from the increasing use of flag of convenience (FOC) shipping.
In particular, it is clear that our domestic maritime sector is finding
it increasingly difficult to compete with shipping operations that pay very
little tax – both in Australia and elsewhere, have fewer regulatory and
compliance burdens, and that are able to pay their seafarers far below
Australian wages, sometimes less than
This should be of great concern to the Commonwealth. Any further decline
in the local maritime sector will create a substantial loss of jobs for
Australian workers, and will deplete capacity and skills in our future maritime
sector. It could also threaten the safety of this nation, not only by creating
vulnerabilities in our national and fuel security systems, but also by threatening
the health of our marine environment.
This inquiry highlighted two case studies that illustrate how the
increasing use of FOC vessels in Australian waters is profoundly affecting the
local shipping industry.
The committee received compelling evidence about sacking of the Australian
crew of Alcoa's MV Portland vessel in early 2016, and their replacement
by foreign workers. These local seafarers, who pay Australian taxes, and
support their families and local communities, were replaced by lesser-skilled
workers being paid less than $2-an-hour on FOC vessels. The Kwinana to Portland
route serviced by the MV Portland is a permanent run for Alcoa, yet
it is now being undertaken by FOC ships on temporary licenses. This is evidence
of the poor outcomes of FOCs for Australian workers, as well as the
insufficient oversight of the temporary license provisions for FOC vessels by
the Australian Commonwealth.
Secondly, evidence received by the committee regarding the MV Sage
Sagittarius showed insufficient Commonwealth oversight of workers on
maritime visas working on FOC vessels. The committee was very concerned about
the apparent lack of monitoring of foreign seafarers working in Australian
waters, and the repeated entry of a person who had admitted to underhand
behaviour, including bullying, coercion and gun running. This lack of oversight
could indicate certain vulnerabilities in Australia's security system that are ripe
for exploitation by individuals working on FOC vessels in the future.
Moreover, the cases of both the MV Portland and the MV Sage
Sagittarius demonstrated that, despite progress in the international
shipping sector since the Ships of Shame reports in the early 1990s,
there are still many improvements in seafarer's conditions yet to be made.
Given these examples and other evidence received, the committee considers
that the Commonwealth should give more serious consideration to the centrality
of Australian shipping to the health of our national economy and security
systems, as well as to our environment, by undertaking a full review of our
In this review, it should apply an evidence-based, rather than
ideological approach to assessing the wisdom of allowing the total destruction
of the Australian shipping sector. The committee calls on the Commonwealth to
comprehensively consider ways that it can work to strengthen the local maritime
sector. In particular, the Commonwealth should look at legislating to encourage
the use of Australian-flagged ships crewed by Australian workers for our
coastal trade, building on the 2012 reforms that look to revitalise the local
The committee considers that this inquiry has raised significant
concerns around FOC shipping for the Commonwealth, which warrant continued
investigation in the future. For this reason, it has decided to table this
report as an interim report, hoping that this committee will be able to take up
some unresolved aspects of this inquiry in the next session of Parliament.
The committee recommends that the Commonwealth undertake a review of the
Australian maritime sector, with a view to building on the 2012 reforms aimed
at growing the Australian-flagged shipping industry in the future.
The committee recommends that this review include a comprehensive
whole-of-government assessment of the potential security risks posed by flag of
convenience vessels and foreign crews.
The committee recommends that this review include consideration of ways
to harmonise the operations of the Australian shipping sector across
jurisdictions through COAG to reduce red tape for vessel and port operators,
including cargo handling provisions.
The committee recommends that this review include widespread
consultation with the Australian shipping industry to ensure that its findings
are relevant and directed to shared objectives for the future of the local
The committee recommends that the Commonwealth immediately tighten the
provisions for temporary licenses in Australian maritime law, to flag of
convenience vessels being used on permanent coastal freight routes if they fail
to pay Australian award wages to their crew.
The committee recommends that the Commonwealth adopt a broader and more rigorous
approach to the risk assessment and oversight of seafarers working in
Australian waters on maritime visas, and better share this information across
relevant Commonwealth and jurisdictional agencies.
The committee recommends that the Australian Government continue to work
with international agencies, including the International Labour Organisation
(ILO), to improve the working conditions, safety standards, and rates of
remuneration for seafarers working in international shipping.
The committee recommends that the Australian government look for ways to
support the Maritime Labour Convention (MLC) to make flag of convenience
shipping more accountable to international law and, when in Australian waters,
to our national regulations.
The committee recommends that the Commonwealth consider ways to improve
the early intervention and counselling resources available to crews on
international vessels, including those operating on flag of convenience
Senator Glenn Sterle
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