Australia plans laws to overhaul shipping

A plan to introduce new shipping laws in Australia would make it easier for foreign firms to operate in Australian ports, but the move has raised concerns that it could destroy the local shipping industry.

The overhaul, proposed by Prime Minister Tony Abbott, will effectively grant foreign-flagged ships equal and unrestricted ability to trade in Australian waters.The Infrastructure Minister, Mr Warren Truss, said the changes will cut red tape, reduce freight costs and encourage more shipping firms to operate in domestic waters.

“(The legislation) simplifies the coastal trading system and will reduce costs to business, safeguard jobs and provide greater access to competitive international shipping services,” a spokesman for Mr Truss told The Straits Times.

“The reform will deliver more affordable freight costs for businesses and greater choice between shipping companies. This means more freight and more efficient services, all of which make Australian products more competitive – internationally and domestically.”

The changes include a controversial proposal to allow foreign- flagged ships to pay workers at international wage rates rather than the much higher Australian wages, so long as the ship spends less than 183 days – or half the year – in Australian waters.

Average Australian wages for an able seaman are about US$2,742 (S$3,870) a month, compared with US$850 for foreign crew, according to the Maritime Union of Australia.

Local firms and unions warned that the changes will threaten local jobs, and few ships in the Australian fleet will survive.

A report by The Australia Institute, a progressive think-tank, said 93 per cent of the nation’s seafaring jobs – or about 1,000 – would be lost, leaving just 88 jobs.

“The proposed (Bill) is likely to reduce employment for relatively little economic benefit,” said the report. “What little benefit that is generated will accrue largely to foreign-owned shipping and bulk-freight using companies.”

The Maritime Union said Australia’s maritime defences will be weakened because the country will not have a merchant fleet that can assist with naval or humanitarian missions.

“The Bill will destroy the Australian shipping industry,” the union said, in its submission to a parliamentary inquiry examining the changes. “It removes all preferential treatment for Australian ships, which has been at the heart of maritime and shipping policy in Australia for over a century.”

The Labor opposition also criticised the changes, saying foreign ships tend to have lower safety and environmental standards.

“There are major problems with some of the foreign shipping companies in terms of their practices and their standards,” Labor’s infrastructure spokesman, Mr Anthony Albanese, told ABC Radio. “When there have been environmental issues… they’ve all been foreign- flagged ships.”

The Bill proposes placing all ships – foreign and local – under a general licence.

Under the current laws, foreign ships can receive only temporary licences, which require them to provide voyage details in advance. Local shipping firms can then apply to undertake the same voyage which, if permitted, would replace the foreign vessel.

Business groups have said the changes would reduce costs for Australian manufacturers and exporters, particularly for goods such as cement, steel, oil, food products and aluminium. Some businesses have reportedly claimed that it is currently cheaper to ship goods to Asia than between Australian ports.

The Business Council of Australia told the inquiry that the current rules were harming Australia’s competitiveness. “Cabotage (foreign carrier) restrictions can mean Australian firms are paying rates that are up to double the rates offered by foreign ships, adding tens of millions of dollars to their cost base,” the council said.

It advised the government to consider negotiating over the 183-day exemption proposal, because the other changes were too important to risk “for this measure alone”.

The government said the local shipping industry has been in sharp decline, with the number of major domestic vessels dropping from 30 in 2007 to just 15 last year.

“Over the next 25 years, Australia’s overall freight task is expected to grow by 80 per cent but coastal shipping’s share is expected to grow by only 15 per cent,” said Mr Truss’ spokesman. “Without serious reform, shipping will not recover.”

The inquiry is due to report on the Bill on Oct 12. The government will then need to win the support of cross-bench MPs in the Senate to pass the Bill. 

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