Coastal Shipping Policy and Regulation Inquiry
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2008SUBMISSION 29 Coastal Shipping Policy and Regulation Inquiry House of Representatives Standing Committee on Infrastructure, Transport, Regional Development and Local Government Australian Shipowners Association 1 SUBMISSION 29 Executive Summary and Introduction The review being undertaken by the Committee on Coastal Shipping Regulation and Policy was foreshadowed as a primary recommendation of an Independent Review of Australian Shipping published in 2003. The Committee’s deliberations in 2008 are timely indeed. A recent publication by the Australian Shipowners Association profiled a sample of the Association’s Members’ fleets. It revealed that Australian controlled shipping has become far more globalised than many might have imagined. 19 different flags of registry and 25 nationalities of crew are a stark contrast with what is thought of as being “Australian shipping”. The Australian shipping business capability is alive and well and can be harnessed in a reinvigorated Australian shipping capability. The Australian Shipowners Association represents 22 major Australian corporations operating in deep-sea, towage, salvage and offshore oil and gas support sectors. ASA Members variously operate in international trades, domestic trades or both. They operate Australian ships, foreign ships, employ Australian crews or foreign crews or both. They hold coastal licences and utilise single and continuing voyage permits. Notably some of ASA’s Members are very large cargo interests. ASA Members own ships, operate ships, charter ships in and out and manage ships. ASA’s Members are: ANL Container Line North West Shelf Shipping ASP Ship Management Service BHP Billiton P & O Maritime Services BlueScope Steel Perkins Shipping BP Australia Queensland Alumina Limited Caltex Rio Tinto Marine Cement Australia Searoad Shipping CSR Shipping Group Shell Tankers Australia Bernard Schulte Ship Manageme Sugar Australia Farstad Shipping (India Pacific) Svitzer Australia Jebsens International Teekay Shipping (Australia) (Australia) The Shell Company of Australia ASA submits that what is required is a vision for Australian shipping. As Auslink is the vision for land-transport in Australia, so a new vision – perhaps “Sealink” – is needed for the future of Australian sea transport. The vision required will reflect international practices that are well established and plain to see in many OECD nations. Each country has tailored measures made available to its shipping industry according to its own circumstances and the realities that exist in Australia would mould the Australian response. 2 SUBMISSION 29 The realities in Australia are that: • Australian ships operate at a cost disadvantage of at least $3 million/annum. • In international shipping trades more than 99% of Australia’s external trade is carried by foreign ships. • Reliance on foreign ships to carry Australia’s external trade contributes about 8.3% of Australia’s current account deficit. • The domestic freight task is set to double by 2020 at the latest. • Australia is already suffering a crisis in the availability of maritime skills. • Attracting people to the industry is not a problem • The high cost of training (per person) is capacity constraint • There is a strong demand for Australian seafarers from foreign employers. • Other countries offer measure creating a more attractive business environment for shipowners. • The Australian controlled fleet has taken advantage of these more attractive business environments. • Australian ship owning/operating entities would prefer to operate in an Australian environment if it is commercially sensible to do so. • Cargo owners are acutely sensitive to sea transport services having regard to cost, quality and reliability. Some of these realities are problems whilst others are opportunities. This submission proposes steps that would solve problems and exploit opportunities. ASA has sought to provide the committee with a comprehensive submission that is in three parts. Part 1 describes and promotes shipping as a mode of transport across both Australia’s international and domestic freight tasks. The benefits of modal shift are discussed, the contrast between the infrastructure requirements of land transport compared to sea transport are highlighted. Part 2 makes the case for Australian participation in shipping. The ASA submission emphasises the need for maritime skills development and a fairer distribution of the burden of providing those skills. An analysis is provided which shows that the cost of employing Australian crews is typically around $3million/annum greater than employing a foreign crew in a comparable foreign ship. The leave component of Australian seafarers’ terms and conditions of employment is discussed and a range of views regarding the leave question is proffered. Defence support and security are discussed and links that have been established with the Department of Defence and the Royal Australian Navy are described as being positive, cooperative and supportive: the shared problems of skills shortages and maritime capabilities have been recognised and are a substantial positive development since the merchant navy in Australia was last looked at in any detail. Part 2 also discusses what it is that has prompted Australian owners and operators to place their business in countries other than Australia. The question as to “what would bring them home” is posed and answered. The answer suggested is that 3 SUBMISSION 29 Australia could create an investment environment which realistically matches international practice in shipping business. Part 3 investigates the legislation that regulates shipping in Australia. The system known as cabotage that operates in Australia is confused. The day to day administration of coastal shipping contributes to differential competitive positions for Australian and foreign shipping competing in the same market. The unhelpful impact of that environment on new investment in Australian sea transport is discussed. This submission contends that the key is a comprehensive review of the Ministerial Guidelines by which permits are made available to unlicensed ships to remove qualitative uncertainties. Finally the Association’s submission proposes recommendations. The recommendations if implemented would align Australia with practices that exist in many OECD and other countries and would pave the way for a bout of investment in modern technically and environmentally efficient ships and facilitate an orderly modal shift in Australia’s domestic freight market towards sea transport on long distance routes. The key would be that Australia would have an internationally competitive shipping capability in both its domestic and international sea trades. Summary of Recommendations ASA recommends that: 1. There be a clearly stated policy to the effect that Australia should have a viable, internationally competitive, indigenous shipping capability. 2. Measures akin to those available in other countries be adopted in Australia with the specific intention of developing a national shipping capability for both international and domestic trades. These might be best implemented via a Second Register. 3. Measures to be included to give effect to an internationally competitive national shipping capability should include but not be limited to: a. A suitable amendment of 23AG of the Income Tax Assessment Act 1936 to give effect to an internationally competitive tax regime for Australian seafarers engaged in international trades. b. A cap of the effective working life of a vessel of the order of 5 years so as to encourage investment in modern, technically and environmentally efficient ships. c. An internationally competitive taxation regime, such as a tonnage tax which may create training obligations. d. A measure or combination of measures to address the $3 million/annum crew cost differential between Australian crew and foreign crews. 4. A review of the Ministerial Guidelines for the issuing of permits be undertaken; 4 SUBMISSION 29 5. That the Australian Government take a lead role in address the seagoing skills shortage. We recommend the following actions be considered: o The entire Australian maritime-related sector contribute to the cost of securing the seafaring skills base on which its organisations depend. o A Training Trust be established to provide a single vehicle for the receipt and administration of the wider industry’s financial contributions to the cost of seafarer training. o Training structures be reviewed with the view of becoming more efficient and effective. o Avenues be developed within the industry for individuals to pursue a seagoing career with or without an employer cadetship/traineeship. o It is recommended that the Maritime Crew Visa be extended in application to allow foreign riding gangs to work on Australian ships for the specific purpose of general maintenance. 5 SUBMISSION 29 Table of Contents 1 Part 1: Shipping as a Mode of Transport............................................................. 8 1.1 Section A - Overview of the Shipping Industry .............................................. 8 1.1.1 Shipping and world trade........................................................................ 8 1.1.2 Patterns in global sea transport .............................................................. 9 1.1.3 Safety and Regulation .......................................................................... 11 1.2 Section B - The Australian transport network.............................................