Shipping reform cost claims challenged

Shipping Australia has sided with Labor over coalition claims that shipping reform will increase freight costs

March 16, 2012

Shipping Australia Limited has sided with Labor over coalition claims that shipping reform will increase freight costs.

Transport Minister Anthony Albanese says Deloitte Access Economics modelling released Wednesday, which show reforms will increase freight costs by up to 16 percent,
is wrong.

The modelling, commissioned by Australian Dry Bulk Shipping Users, also found the changes would lead to as many as 570 job losses and cost $466 million by 2025.

Albanese Albanese says the figures appeared to be based on an assumption that foreign ships currently paid wages below Australian levels.

"The government's shipping reforms do not close the coast to foreign ships - they encourage more Australian ships to compete against the foreign shippers," he says.

Shipping Australia Limited Chief Executive Officer Llew Russell supported the comments, despite making several public submissions against the reforms.

"Albanese is right in general terms,"
Russell says.

says comments that foreign ships will be phased out under the new policy are simply not true.

"The proposal is not to force foreign ships off the coast."

"And it gave a free kick to Albanese really - he was easily able to point out that it was not correct."

"They should be more upfront with what they
say, rather than saying that foreign flag ships are being phased out. "

But he says he still has reservations about the reforms.

"Personally, I
don’t see why the government had to change it (the system)," he says.

"I think the old system was fine."

"It’s a very complicated area the more the department got into the more complicated they found it."

"We put in a couple of submissions, but that’s water under the bridge now."

"The government has decided to do it, so you’ve got to accept that, and do the best with got you’ve got, which is what we’ve done."

Russell says in the last four months Shipping Australia Limited has had close consultation on the drafting of the bills.

"They have been substantially changed as a result and we are a lot happier now with where we ended up than where we started," he says.

"We feel that it is heading in the right direction."

Infrastructure and Transport Minister Anthony Albanese announced the government’s shipping policy reform, ‘Stronger Shipping for a Stronger Economy’, which included the Coastal Trading Bill 2012 in September 2011.

The shipping package comprised four elements: tax reforms aimed at removing barriers to investment in Australian shipping; simplified regulatory framework with a transparent licensing regime; the establishment of an Australian International Shipping Register (AISR); and the establishment of a Maritime Workforce Development Forum.

A total of 15 submissions were received on the Bill, including submissions from the Freight and Logistics Council of Western Australia, Sugar Australia, and the Cement Industry Federation.

The public submission period closed on March 5, 2012.

Minister Warren Truss says, under the proposed Bill, Australian companies will find it uneconomic to ship products around the coastline.

He says under the new shipping regulations, production will be cut in preference of imports and lower costs.

"Sugar is already being shipped from overseas direct to our southern ports because it’s cheaper than shipping it from eastern Australia," he says.

Truss says Australian cement producers, who rely on coastal shipping to move their product, will also be affected.

"…our biggest competitors in cement – China, Indonesia, Taiwan and Thailand – will now be able to radically undercut Australian suppliers on shipping costs alone," he says.

"Such a shift to imports will put at risk some 1,800 Australian jobs in the cement industry."

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