Maritime Union of New Zealand Submission to the Senate Inquiry into the increasing use of so-called Flag of Convenience shipping in Australia Joe Fleetwood National Secretary Maritime Union of New Zealand 11 August 2015 1 1. Introduction 1.1. The Maritime Union of New Zealand (MUNZ) is New Zealand’s main union in the maritime industry, with approximately 3,000 members mainly comprising waterfront workers and seafarers, many of whom work in high risk environments. 1.2. MUNZ is an affiliate of the New Zealand Council of Trade Unions (NZCTU), the International Transport Workers’ Federation (ITF) and the Maritime International Federation (MIF). 1.3. Through the ITF and MIF, MUNZ has a very strong relationship with the Maritime Union of Australia, both historically and in modern days. 1.4. There is a substantial cross flow of maritime workers especially in the seafaring sector between the two countries. 1.5. Australia and New Zealand share similarities in terms of their maritime regulatory frameworks, skill base, economic development, and employment relations systems. 1.6. Both are maritime trading nations that depend on shipping for export and import. 1.7. Flag of Convenience (FOC) vessels are registered in countries with very lax or non-existent regulation of the maritime industry. 1.8. Flag of Convenience is a term coined by the ITF, used to describe the flag of a ship whose ownership/control lies outside the country of the flag. Certain countries such as Panama and Liberia are declared FOC countries; so all vessels flying their flags are considered FOC. 2 1.9. FOCs provide a means of avoiding labour regulation in the country of ownership, and become a vehicle for paying low wages and forcing long hours of work and unsafe working conditions. 1.1. The use of Flag of Convenience shipping is of major concern to MUNZ and the purpose of this submission is to alert the Australian people to the problems that have resulted from FOC shipping in New Zealand. 1.2. There are two main objections of MUNZ to the use of FOC shipping in the New Zealand context: (a) the problems with FOC ships themselves, including seaworthiness, health and safety, competence and skills of crew, rights and employment conditions of crew; (b) the negative effect of FOC shipping on local shipping, employment, skills, economic security and the environment. 2. Flag of Convenience Shipping in the New Zealand context 2.1. New Zealand coastal shipping is regulated in the main under Section 198 of the Marine Transport Act 1994 and related provisions of the NZ Ship Registration Act. 2.2. Section 198 restricts access to coastal trade to New Zealand ships; foreign ships on demise charter to a NZ based operator; or a foreign ship that is passing through NZ waters while on a continuous journey from a foreign port to another foreign port, and is stopping in NZ to load or unload international cargo. 2.3. This so-called “open coast” policy which was introduced in the early 1990s has resulted in a major decline in New Zealand shipping, to the extent that New Zealand now only has a very small number of larger flagged vessels in its domestic freight fleet, including inter island ferries, 3 bulk carriers and container vessels.1 2.4. This has led to a decline in employment for New Zealand seafarers, and a low number of trainees coming into the industry, which given the growing importance of maritime transport and maritime resources for New Zealand is of grave concern. 2.5. There have been frequent and serious safety incidents involving FOC vessels in New Zealand ports and New Zealand waters. These have included equipment failure, unsafe conditions, and the grounding of the Rena in 2011. 2.6. The conditions for crew members aboard Flag of Convenience vessels can be poor, and on many occasions the Maritime Union of New Zealand, working with the ITF, have intervened on behalf of distressed foreign crew members in cases involving repatriation, back pay and other welfare issues. 3. The Rena 3.1. The 2011 grounding of the FOC container ship Rena was the worst oil spill in New Zealand history. 3.2. The Rena was a Liberian flagged container ship with gross tonnage of 37,209 tonnes. It was owned by a subsidary of the Greek company Costamare Inc. and chartered by the Mediterranean Shipping Company. 3.3. At 0214 hours (New Zealand daylight time) on 5 October 2011 the Rena grounded on the Astrolabe Reef, Bay of Plenty, New Zealand, en route from Napier to the Port of Tauranga. 1 Coastal Shipping and Modal Freight Choice, NZ Transport Agency, 2009 4 3.4. 1,733 tonnes of heavy fuel oil (HFO) were on board Rena when it grounded, with around 350 tonnes estimated to have been lost overboard in the first week and further smaller amounts subsequently. 1368 containers were listed on the original manifest. Salvors recovered 1039, with 329 unrecovered, either trapped in inaccessible parts of the wreck or lost to the sea.2 3.5. The grounding received world wide attention with attention being drawn to the lack of regulation and accountability of FOC shipping. 3 3.6. The ransport ccident nvestigation ommission ound that the grounding was due to several factors: • not following standard good practice for planning and executing the voyage; • not following standard good practice for navigation watchkeeping; • not following standard good practice when taking over control of the ship. 4 3.7. In the aftermath of the Rena grounding, Russell Kilvington, former director of the New Zealand Maritime Safety Authority (now Maritime New Zealand) noted with reference to the accountability and quality of international shipping such as the FOC Rena: “Another lesson that is bound to emerge from the Rena grounding is the fact that New Zealand relies entirely on foreign flagged vessels with foreign national crews as a means of importing and exporting. I think that the most obvious thing that will come out of this . [is] New Zealand’s all time reliance on international shipping over the years, and as one sees the link between almost everything, owners, charterers, ship management companies, classification societies; as that link continues to fragment and the standard of crews is potentially in danger of declining 2 Maritime New Zealand website 29 July 2015 www.maritimenz.govt.nz 3 Maritime business practice threatens accountability,‬‬ Al Jazeera Television https://youtu.be/XjC8LaCfPRo 4 p.1, Final Report Marine inquiry 11-204 Container ship MV Rena grounding on Astrolabe Reef, 5 October 2011, Transport Accident Investigation Commission (November 2014) 5 for a variety of reasons . then if a coastal state wants to have greater control and greater ways of trying to prevent these things happening, one imagines that would be the way to go.”5 3.8. MUNZ has called for dedicated shipping lanes on the New Zealand coast, on the basis that if ships had to follow dedicated shipping lanes this would end the problem of pressure to divert course to meet tight time windows, which was apparent in the Rena case. 3.9. The cost of the Rena disaster, on top of the environmental damage, was severe, with a bill of over $46 million to the New Zealand taxpayer as at 29 January 2013 – a substantial proportion of which was not covered by compensation. 6 Foreign ship owners must be made to pay for full clean up, not the taxpayer. This factor must be taken into account when the “cost savings” of FOC shipping are touted. 4. Health and safety implications of FOC vessels 4.1. There have been a substantial number of safety incidents with other FOC vessels that have resulted in death, injury and near misses to crew and port workers in New Zealand.7 4.2. The previous grounding of the Panamanian flagged log ship Jody F Millenium at Gisborne in 20028 with subsequent oil spill is another example of serious FOC vessel incidents in New Zealand at a multimillion dollar cost9. 5 pp186–187, Black Tide: the story behind the Rena disaster, by John Julian (Hachette, 2012) 6 http://www.treasury.govt.nz/publications/informationreleases/renacosts 7 http://www.radionz.co.nz/news/regional/267564/port-fatalities-under-scrutiny 8 https://www.maritimenz.govt.nz/Publications-and-forms/Accidents-and-investigations/Accident-reports/Jody-F- Millennium-022828-mnz-accident-report2002.pdf 9 http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=1843183 6 4.3. Two foreign crew members died and a third was hospitalized after being asphxiated on the FOC vessel TPC Wellington at Marsden Point in 2010 after entering a hold without correct breathing apparatus. 10 5. Issues for Crew of FOC vessels in New Zealand waters 5.1. The Maritime Union of New Zealand working with the ITF has repersented distressed crews on many occasions. 5.2. Issues dealt with on FOC vessels range from underpayment of wages, failure for crews to be returned home at the end of their contracts, mistreatment and abuse, all the way up to serious injuries and deaths, and the sinking of vessels. 5.3. The most recent incident was the Lancelot V in Tauranga where the mainly Ukrainian and Filipino crew have been stuck on the vessel since it was arrested in Auckland in May following a dispute between the charterer and the owners of the Greek-owned, Panama registered ship. The ship came to Tauranga in June to complete its discharge and was re- arrested. While food supplies dwindled, action by the International Transport Workers Federation and the Maritime Union of New Zealand succeeded in getting the men fed and paid on ITF rates, which equate to more than they were being paid by the owners.11 5.4.