PARLIAMENT HOUSE, CANBERRA:
I rise to speak against these shipping reform bills, the Shipping Reform (Tax Incentives) Bill 2012 and related bills. I do so because they are fundamentally protectionist in nature and will increase the cost of shipping, which will then flow through to almost every product in our society. It is important that we take a very close look at these five bills in front of us which together comprise the shipping reform bills. It is important because sea transport is a large and rapidly growing industry. It carries over 99 per cent of international cargo by weight and about 75 per cent by value, and about a quarter of Australia’s interstate trade is done via ships. This is supposed to grow exponentially. Indeed, it is due to double by 2020 and treble by 2050. It is also important because coastal shipping flows through to everything we consume and nearly every business transaction that we have in an island continent.
Australia has the fourth largest shipping task in the world and it impacts nearly every residence across Australia. So this is an important piece of legislation not just for those who are directly impacted by shipping and use shipping but for every Australian, because ultimately the costs of shipping flow through to Australians. At its heart, are changes to the way foreign carriers apply for and are granted permission to carry coastal cargo around Australia. In essence, it creates a new licensing regime. Today there is a system in which non-Australian registered ships can be granted permits to operate single and continuous voyages in Australian coastal waters. This is to be replaced with a new regime under which Australian flagged vessels will have unrestricted access to coastal trade and foreign vessels can be granted a year-long temporary licence to operate.
The intent of the legislation is to stimulate growth in the number of Australian ships on our coast and to maximise the use of Australian flagged vessels. We have no concern about trying to support the Australian shipping industry, but we believe that it should not be done at the cost of efficiency and not where it brings extra impost to Australian businesses, which are already struggling against international competition.
My key issue with this legislation comes from its central objective, which I believe is the wrong objective for these shipping reforms. The Minister for Infrastructure and Transport in announcing the package in September outlined the core objectives of these reforms. He said, ‘What we are doing is creating an economic and regulatory environment that will revitalise and sustain growth and productivity’ in our shipping industry. As I said, we of course support our shipping industry, but the objective should be broader than just sustaining and growing the Australian shipping industry. Rather, the reforms should be governed by the goal of raising the efficiency of the sector overall and ensuring globally competitive costs for transporting Australian goods by ship. That should be the goal. It is a critical distinction. The goal of the government is all about the Australian shipping industry alone and ensuring its growth; whereas, we are concerned about the efficiency of the entire Australian economy and therefore ensuring that there is an efficient shipping industry overall where there is fierce competition between Australian providers and international providers.
By the government taking this narrower objective for these bills, they have essentially made them protectionist. What this protectionism does—as it nearly always does—is lead to higher costs. They do this by adding huge complexity and compliance when using foreign shipping companies.
For example, the new scheme requires international parties who are seeking a temporary licence to carry out a minimum of five voyages in the year. This excludes from the market suppliers wishing to carry out, for example, a single coastal voyage—perhaps as part of a longer voyage from a foreign country to Australia and back. It also imposes a significant compliance burden as it requires those seeking a temporary licence to give details about their planned voyages well in advance. This will mean that businesses will become less likely to use international ships, because of the uncertainty of the compliance regime and because the additional costs are too great.
It may well be that the Australian shipping industry will get additional business as a result of this legislation. But it will be at the expense of all the customers who use the shipping industry, and all of their customers. The government did not try to quantify the cost of this reform package to Australian businesses who use shipping, but the Australian dry bulk shipping users did try to quantify it. Indeed, they commissioned Deloittes consulting firm to examine the impact of these bills, from a cost perspective. What they found, as a number of coalition members have said previously, is that these reforms will lead to an increase in the cost of coastal shipping of 16 per cent. They suggest that this cost will be borne by the users of coastal freight. They found that the impact on our GDP over the period to 2025 will be between negative-$242 million and negative-$466 million. It is a very clear negative on our GDP. Of course, if you increase the costs of shipping you also increase the costs of transport, and that flows through to every businesses and every family using the products that use shipping. According to Deloittes, it will also cause the loss of 570 workers across Australia, due to the increased costs of this shipping.
This will flow through to the entire economy, as I said. If you increase transportation costs—whether it be road transportation costs by putting a tax on diesel or whether it be shipping transportation costs through the protectionist measures which are inherent in these bills—then those costs will flow through to the entire economy. It will particularly hit our manufacturers, and they will be hit at a time when they can least afford it. I have a manufacturer in my electorate, a very successful one to date, who is extremely concerned about the impact of these shipping reforms. The manufacturer is Veyance Belting Pty Ltd, which manufactures huge conveyor belts which are used in all sorts of industrial applications, including in the mining industry. They employ about 145 workers directly and about 300 workers indirectly. Their major production site is in my electorate in Bayswater. Mr David Stone, who is the General Manager of Veyance Belting, says that these changes could put his entire business in jeopardy. He says:
the proposed changes in legislation which will threaten our new press project and future viability for manufacturing in Victoria. This change will force Veyance to road freight all of our rolls of conveyor belting to the Pilbara Iron Ore region which will dramatically (40% +) increase our freight bills. This increase could tip us over the edge in maintaining our competitive advantage from overseas manufacturers.
That is the impact that this legislation will have on the ground for manufacturers across our communities. The additional cost for Veyance Belting and all of the other manufacturers who rely on the shipping industry comes on top of everything else which this government is doing to make it harder for manufacturing. Of course we know about the carbon tax, which is coming our way on 1 July, which operates like a reverse tariff. It will make it more expensive for our manufacturers to produce goods but it will not make the products of their international competitors more expensive when they import them into our country. We know about the extra regulations which this government has put on businesses. And of course we know that they have made the industrial relations regime less flexible for businesses. Increasing the cost of shipping transport is just another nail in the coffin for our manufacturing industry.
We should be doing everything we can for our manufacturers and for other businesses at this moment—not adding to their costs. Of course, if the costs to a business or a manufacturer increase, then those costs will flow on to its products and therefore to consumers. So this bill is also going to add to cost-of-living pressures at a time when consumers and families across Australia can least afford them. They know that electricity prices have gone up by 66 per cent over the last five years. They know that water prices have been going up astronomically. They know that the costs of gas and child care have been going up way in excess of the rate of inflation. The last thing they need is additional cost of living pressures put on them through this legislation.
These are bad bills. They are protectionist in nature. They are a sop to the MUA, which is the major beneficiary of these bills. They will increase costs to all the businesses in Australia who use shipping transportation, and they will increase costs to Australian families. They should be firmly rejected. At the very least, these bills should be put to the Productivity Commission so that their impact can be examined before they are taken any further.