The Tasmanian government has welcomed the Senate Select Committee inquiry into the Tasmanian Freight Equalisation Scheme (TFES).
The TFES provides financial assistance for incurred costs by shippers of eligible non-bulk goods being shipped across the Bass Strait, and came into effect almost 40 years ago with the goal of providing Tasmanian businesses equal opportunity to compete in other markets.
In the 2023-24 financial year a total of $181.7 million was spent on the scheme.
Tasmania Minister for Business, Industry and Resources, and Transport Eric Abetz says the inquiry will help bring the TFES into the modern age.
“The scheme has been in place for almost 40 years and has been the subject of a number of inquiries over that period,” Abetz says.
“There is no doubt that Bass Strait shipping has undergone considerable change in that time, with significant increases in service frequency and capacity.
“As an island state, Tasmania relies heavily on sea freight and the TFES is vital to placing Tasmanian businesses on a level playing field with rest of Australia.
“Over time, successive amendments to the scheme have created some apparent inconsistencies in its scope and operations. For example, King Island and Flinders Island are treated differently.
“I am pleased to see the Select Senate Committee will consider the treatment of the Bass Strait Islands.”
TFES assistance varies on a case-by-case basis, with the inability for Tasmanian companies to utilise interstate road or rail freight a key pillar on which it has been built.
The amount of assistance is based on the difference between the freight costs of moving the goods in question by sea and the national freight costs of moving them by road over an equivalent distance.
Services Australia undertakes deliver of the scheme on behalf of the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (Infrastructure), with current ministerial directions last varied on June 3, 2021.
Minister for Primary Industries and Water Jane Howlett says the scheme, while effective, simply has not kept up with rising shipping costs.
“Agribusinesses and producers and their representatives like TasFarmers have expressed their strong concerns to me that TFES assistance rates have not changes since 1998 and do not reflect increasing Bass Strait shipping costs,” Howlett says.
“This has become increasingly clear during the current feed and fodder shortage due to drought conditions.
“I have also been advised that accessing the scheme is complex, and some business owners must engage a consultant to help them understand their entitlements and submit claims for assistance.”
The inquiry will be chaired by Senator Tammy Tyrell.
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