Prime minister to take Productivity Commission’s TFES recommendations to Joint Economic Council
Prime minister Tony Abbott will personally address Tasmania’s logistics needs, deputy prime minister Warren Truss has confirmed.
Truss underlined the commitment when launching the Productivity Commission’s (PC) latest inquiry report on the subject, Tasmanian Shipping and Freight.
“The Prime Minister has undertaken to personally hear feedback on the report at the Joint Economic Council meeting to be held in Tasmania in coming weeks,” Truss says.
“Further, the government will consult closely with Tasmanian members and Senators who know first-hand how important competitive shipping and freight services are to the Tasmanian economy.
“The Prime Minister has also given his personal assurance to retain the Tasmania Freight Equalisation Scheme [TFES] and the Bass Strait Passenger Vehicle Equalisation Scheme.
“These schemes were introduced by previous Coalition Governments and we will honour our election commitment to keep them.”
The Government is considering the recommendations of the report and will provide a formal response following consultation with the Tasmanian Government and the Joint Commonwealth and Tasmania Economic Council.
With the Federal commitment in mind, the PC was not able to advise that the schemes be scrapped but was highly critical of the TFES, saying: “There is no coherent economic rationale for the Tasmanian Freight Equalisation Scheme, and it falls well short of what is needed to improve the lagging competitiveness of the Tasmanian economy.”
Instead, it calls for the TFES to be changed to a flat rate of subsidy per 20-foot equivalent unit (TEU) shipped out, as long as costs are unchanged.
This gained the Tasmanian Government’s backing.
“We particularly welcome the Productivity Commission’s positive recommendation of extending the Tasmanian Freight Equalisation Scheme to north bound export freight,” premier Will Hodgeman says.
“This has always been our position.”
Barring that, the rate should be based on parameters recommended by the Bureau of Infrastructure, Transport and Regional Economics (BITRE), informed by a public consultation process, and payable only on the basis of evidence of actual wharf‑to‑wharf costs.
In the absence of direct international shipping calls the TFES should be extended to exports – a move backed by some transport industry players.
The Commission urged the Federal Government to push for major changes in Tasmania’s approach to ports and freight modes through involvement in a “comprehensive, long term integrated freight strategy for Tasmania” driven by the State and including a port privatisation option, noting the State Government’s controversial pledge to subsidise direct international calls complicated what it regards as pivotal coastal shipping reforms.
That reform was crucial, the Australian Industry Group (Ai Group) states in its response the report.
The existing coastal shipping arrangements are far too costly and inflexible, both for users and suppliers of coastal shipping services. The current arrangements are having negative effects on industry and the whole community,” Ai Group CEO Innes Willox says.
“Australian companies need access to sea transportation at reasonable prices in order to remain competitive and productive.
“The use of sea transportation avoids congestion and higher maintenance costs on Australia’s road and rail networks. It is of course vital for Tasmania as an island State.”