Dissenting Report by Government
Senators Williams and Heffernan
As an island nation, shipping is a vital part of our transport network.
In a land as vast as ours, surrounded by oceans and separated from major
international markets, safe, efficient maritime transport networks are vital in
sustaining a healthy economy. A viable shipping industry is essential to
Australia's capacity to compete in global markets. With 99 per cent by weight
and 79 per cent by value of Australia's international trade carried by sea,
Australia must ensure that our shipping services are more open and competitive.
Australia's freight task is expected to grow by 80 per cent come 2030,
but coastal shipping will only increase by 15 per cent. This is simply because
it is currently not viable or competitive.
In 2006-7, we had 30 major Australian trading vessels with a General
Licence, by 2013-14 the number had declined to just 15. Labor's efforts under
the Coastal Trading Act 2012 to revitalise coastal shipping has been a
disaster for local businesses and the need for reform that will save the sector
is very clear. Based on standard crew numbers, this represents over 1,000
Australian seafarer jobs lost in coastal shipping under Labor in the same
period. However far more shore-based jobs have been lost in Australian
manufacturing, which relies heavily on coastal shipping. Manufacturing accounts
for approximately 85 per cent of Australia's coastal shipping task and coastal
shipping represents 15-20 per cent of Australian manufacturers' total costs.
The cost of Australia domestic shipping services is uncompetitive on a
global scale and the movement of manufacturing inputs and completed products on
the Australian coast can be more expensive than importing inputs or finished
products from other countries.
Foreign participation in the Australia domestic maritime industry is
essential for the foreseeable future. The key question is one of the level of
participation of foreign ships , which is currently up to 97 per cent. Labor's Coastal
Trading Act 2012 has restricted access to the Australian market and has
resulted in a situation where Australian businesses frequently cannot access
efficient, flexible and cost-effective shipping services suitable to meet their
The Australian fleet is not large enough to meet demand of shippers. The
Australian fleet is ageing and becoming increasingly expensive to run and
maintain compared to younger fleets. The average Australian flagged vessel is
23 years old where there is a preference for ships under 15 years old.
Australian labour is relatively expensive compared with international
counterparts in a globally competitive industry. Major reinvestment in the
Australian fleet is unlikely - therefore Australian reliance on foreign
shipping services is likely to grow.
The number of temporary licences granted since the provisions were
introduced in 2012, has not changed significantly under either Governments. The
Government oversight has complied with the Coastal Trading Act, which
Labor introduced, including allowing other Australian General Licence holders
an opportunity to express an interest in carrying the cargo and other third
parties to respond to the application. There was no Australian General Licence
holder to carry the cargo and no third party responses were made within the
time frames in relation to the MV Portland. The decision to retire the MV
Portland a 27-year old vessel was a commercial decision made by Alcoa.
Not all foreign vessels operating under temporary licences are flags of convenience.
Correlations should not be made that Australian seafarers have poor outcomes
when applications are made by operators of foreign vessels for temporary
licences - especially where no other Australian vessels are operating.
Furthermore there exists no prohibition to Australian seafarers working on
board foreign vessels.
In relation to visas, late in the inquiry, officials from the Department
of Immigration and Border Protection confirmed that Australia does have a
robust system to monitor foreign seafarers working in Australian waters. The
Department official clarified that:
...We also have a visa system which allows us to screen
individuals prior to arrival and manage their entry and exit over a longer
period of time, but whether or not a visa can be revoked or cancelled depends
on the level of evidence. We do encounter people in the normal course of our
activities who need to have visas removed, cancelled or refused, and we do so
where the weight of evidence or information is sufficient to take that kind of
When questioned by Senator Rice whether there was sufficient evidence to
cancel the visa of the former master of the MV Sage Sagittarius in
relation to his subsequent eight months of coastal trading, the Department
That is essentially correct. We have some allegations about
handling of weapons and perhaps gun-running. We have searched vessels and not
been able to identify any illegal activity in our jurisdiction, and there is a
coronial inquiry underway, but that is not yet concluded. At this stage we
would not have sufficient evidence to take any action.
The Department of Infrastructure and Regional Development clarified that
they had obtained a copy of the transcript of the ongoing NSW Coronial Inquiry
hearing where the former master was appearing. The Department of Infrastructure
and Regional Development has reported that the former master gave evidence he
collected money and helped crew fill in paperwork related to the purchase and
charged a commission for these services. Based on the information in the
transcript, the actual firearms were not on board the vessel. It is inaccurate
to suggest that there has been a lack of oversight or that Australia's security
system is vulnerable. The evidence from the Department of Immigration and
Border Protection confirmed that Australia does have a robust system to monitor
foreign seafarers working in Australian waters.
The inquiry received various submissions and heard evidence from a range
of government agencies, confirming that Australian Government's approach to
maritime transport security is robust, with government agencies and industry
working together to ensure a layered approach to maritime security. All foreign
vessels are assessed and treated according to their assessed risk profile.
The inquiry learned that the Australian Maritime Safety Authority (AMSA)
is charged with implementing the minimum employment law standards, ensuring
seafarers' working and living conditions are in accordance with the mandatory
requirements of the Maritime Labour Convention (MLC), an international
convention developed under the International Labour Organization (ILO). The MLC
applies to all international vessels visiting Australian ports.
The Department of Infrastructure and Regional Development, in its
submission identified that sixty-four ILO Member States representing more than
80 per cent of the world's global shipping tonnage have ratified the MLC
which regulates minimum employment conditions for 1.5 million seafarers. AMSA
ensures compliance with the MLC during Port State Control (PSC) inspections.
There was no evidence to support the statement that the minimum wage is around
$2 per hour for foreign seafarers.
Evidence from AMSA included recognition by the Australian Council of
Trade Unions of AMSA's commitment to implementation and enforcement of the
Maritime Labour Convention (MLC). AMSA included an extract of the ACTU's
submission to the 2014 International Labour Organization (ILO) where the ACTU
and their affiliate the Maritime Union of Australia (MUA) welcomed the
ratification and implementation of the MLC.
In the Department of Infrastructure and Regional Development of
Infrastructure's submission, it was stated that flags of convenience has a
contested meaning. Not all foreign vessels can be considered flags of
convenience. The International Transport Workers Federation (ITF), identifies
34 flag States as offering a 'Flag of Convenience'. Most countries classified
as Flags of Convenience by the ITF are International Maritime Organization
(IMO) Member States - the head United Nations organisation for the ILO. The
significance is that, as stated above, sixty-four ILO Member States
representing more than 80 per cent of the world's global shipping tonnage, have
ratified the MLC which regulates minimum employment conditions for 1.5 million
From their evidence AMSA reported that in 2014, flag of convenience
ships accounted for 60 per cent of inspections and that the overall deficiency
rate for all PSC inspections was 2.9 but for MLC deficiencies it was only 0.44
(health and safety, accommodation, wages etc).
In regard to the rate of deficiencies, flag of convenience ships had a
significant improvement between 1994 and 2004, and since 2004 flag of
convenience ships have performed comparably to all foreign flag ships. This
also includes in relation to protecting the marine environment. The evidence
from AMSA was that risk is more related to the age, type and history of the
ships, not their flag. AMSA point out that in 2014, the average age of foreign
ships visiting Australian ports was 8.4 years - less than half of the
average age of the world fleet (20.2 years). This demonstrates the outcomes
achieved through AMSA's PSC inspection regime and is a measure of the
effectiveness of AMSA's reputation in conducting rigorous PSC inspections. AMSA
reported a significant increase in the 'low risk' ships or ships with a
probability of detention less than one per cent.
In relation to individual ships, 82 per cent of the foreign fleet
visiting Australian ports in 2014 had a probability of detention of less than
three per cent. By upholding such high standards, this is one way in which
Australia is influencing improvements to and compliance with, international
shipping standards in safety, labour and the environment.
We disagree with the views and recommendations of the committee. This
inquiry including the report and recommendations should have focussed more on
what actions Australia is taking, and could be taking, to improve the standards
of international shipping in Australia. The inquiry did not include references
to re-examine coastal shipping, however some evidence was received during the
inquiry that touched on aspects of coastal shipping reform. These issues were
not the subject of wide and/or balanced examination and therefore this inquiry
should not form the basis for a significant change in government policy towards
creating locally owned vessels crewed by Australians as an essential part of
our national transport infrastructure.
Senator the Hon Bill Heffernan Senator
Deputy Chair Senator
for New South Wales
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