Safeguarding the economic future of Port Kembla (29/05/2012)

10 January 2013

port-kembla-harbour.jpgMr STEPHEN JONES (Throsby) (13:28): It is a great pleasure to be speaking on the Shipping Reform (Tax Incentives) Bill 2012 and to have sat in on the last five or ten minutes of the member for Riverina, who was voicing his party's concerns on the introduction of this legislation. I must admit I am not surprised, because, after 11 years in government, their total contribution to shipping policy was a crippling national strike. Their side of politics brought in the dogsblokes in balaclavaswho drove out the workers and drove our country into industrial mayhem for literally months. I am not surprised at all that their contribution to this debate is as vacuous as their 11 years in government were when it came to lasting reform of the shipping industry.

We do need a strong shipping industry, and our shipping industry needs revitalisation and reform. The package of legislation before the House today goes part way to delivering on that reform. The legislation is the product of a long and thorough process of consultation and review, a process that might have escaped the member for Riverina and the member for Dawson and many others on their side of the House. In fact, I am not surprised, as the Deputy Leader of the Opposition and the responsible minister seems to have gone to sleep at the wheel. When it comes to proposals concerning infrastructure, we have not heard one question in the House which reflects his general portfolio responsibility.

Mr McCormack interjecting

Mr STEPHEN JONES: The member for Riverina does his party proud. I know it is a tough job defending your shadow minister, but you have done an admirable job.

The consultation process which they have missed on that side of the House has involved representatives from across government, with Treasury chairing the fiscal group. Exposure drafts of all of the bills were released for public comment, and a further roundtable was held in February to enable industry to work through the details with officials. The government is hardly rushing these bills through the parliament, as those opposite would pretend. There would be no Australian ships left by the time the opposition ever decided what reform actually should entail. In fact, their contribution to policy seems to be, 'Let's have another review.' Maybe that is their plan. Why else would they oppose a zero tax rate and a strong Australian shipping industry? It just does not make sense.

The shipping industry has barely survived a decade of policy inertia by the previous coalition government. These measures represent critical industry reform and policy development. As an island nation, shipping has always played an important part in our nation's history and has always played an important part of the economy in my electorate of Throsby. Australia is the fourth largest shipping task in the world. Today around $200 billion worth of cargo is moved annually. However, today there are only 22 Australian registered major trading ships plying our waters. That is down from 55 in 1995. Of the remaining ships, only fourand they are all gas tankersare dedicated solely to international trade. In the past decade, the Australian fleet has gone from 55 ships down to 21, with only three operating on international routes. In a country where over 99 per cent of our trade is moved by ships, there will soon, if we do not act, be no fleet to revitalise. That is why we need to act now, or we will not have a shipping industry left at all.

Just fifteen years ago the story was different. Then, the Australian merchant fleet comprised around 88 vessels and employed around 5,500 officers and crew. While international competition has taken its toll on this industry, it is also true that government policy settings have not been good. That is why this package of legislation before the House today is good news for the Australian shipping industry. What we are doing is creating an economic and regulatory environment that will revitalise and sustain growth and productivity in our shipping industry. The reform package is in the best interests of our economy, our environment and our security.

I know this because I represent an electorate that takes in Port Kembla, a port which has operated continuously since 1883. The reform package is great news for electorates like mine. Recognised as of the Illawarra's key economic and commercial assets, Port Kembla directly and indirectly sustains over 3,500 jobs and contributes close to $420 million annually to the regional economy. Port Kembla recently underwent a major expansion. It diversified its trade base to include general and break-bulk cargoes, containers and motor vehicle imports. The expansion development included the construction of three new berths and the development of more than 50 hectares of land. This has allowed the port to become the largest vehicle-importing hub in Australia. Port Kembla is now also the principal grain export port for producers in southern and south-western New South Wales, including producers who come from the member for Riverina's electorate. Port Kembla is one of three major ports in the state of New South Wales. The diverse commodity base of the port today reflects the growth of the region and its capacity to service the growing south-western Sydney market and parts of the New South Wales inland.

The package of five bills today includes important reforms which will have a direct bearing on the economy of my electorate in the Illawarra. The government's Stronger Shipping for a Stronger Economy legislative package delivers on our 2010 election commitment to revitalise the Australian shipping industry. The first bill in the package, the Shipping Reform (Tax Incentives) Bill 2012, contains the taxation elements of the reform package. These are aimed at revitalising the industry by making it more globally competitive and attractive to investors, by providing a zero tax rate for Australian shipping companies. That is right: a zero tax rate for Australian shipping companies. In addition to that, it provides accelerated depreciation of vessels via a cap of 10 years to the effective life of those vessels; rollover relief from income tax on the sale of a vessel; an employer refundable tax offset in relation to seafarers; and an exemption from royalty withholding tax for payments made for the lease of shipping vessels.

The second bill is the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012. This goes to the creation of a register through the shipping registration amendment. This will enable Australian shipping companies to compete on a level playing field internationally, by removing the cost disadvantages experienced by Australian registered ships when competing in the global market. Key elements of the register go to a mixed manning registerthat is, internationally registered vessels must employ a minimum of two Australian crew, preferably the master and the chief engineer; a provision for international employment terms and conditions, which includes workers' compensation, which ensure that workers on these vessels will receive internationally competitive rates of pay and conditions, consistent with the Maritime Labour Convention and other international labour treaties; in addition, access to tax exemption and other tax incentives. The same environmental, safety, and occupational health and safety standards will apply to AISR vessels as to first register vessels. Finally, a seafarers bargaining unit must be formed for the purposes of negotiating terms and conditions for seafarers on international voyages, and the bill provides that those collective agreements must form part of the seafarers' individual work agreements. These arrangements strike the right balance between competing on a level playing field internationally and ensuring Australia's domestic maritime industry can grow.

The third bill, the Coastal Trading (Revitalising Australian Shipping) Bill 2012, will repeal the current coastal trading arrangements in part VI of the Navigation Act 1912 and implement a new three-tier licensing system. The new regime will balance support for Australian shipping while establishing clear boundaries for the role of foreign ships in the coastal trade. The new regime will not result in the 'closing of the coast'. Australia has one of the most liberal domestic shipping regimes, with 30 per cent of coastal cargos being carried on foreign vesselsthat is, 470 permit ships at present.

The fourth bill is the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012. The transitional provisions set out in this bill are necessary to enable a smooth transition from the old regulatory regime to the new framework. This will ensure that the supply chain will continue to operate as the system is being bedded down.

The fifth and final bill is the Tax Laws Amendment (Shipping Reform) Bill 2012, which provides a number of tax incentives designed to stimulate investment in Australian shipping and encourage Australian ownership of ships and ship operations. These incentives include: an income tax exemption for ship operators, which is a zero tax rate for Australian shipping companies; the provision for accelerated depreciation of vessels via a cap of 10 years, to the effective life of those vessels, which is a reduction from 10 years, halving that rate; a rollover relief from income tax on the sale of a vessel; an employer refundable tax offset for seafarers; and an exemption from royalty withholding tax for payments made for the lease of shipping vessels.

Taken together, these are important bills that will go a long way to the revitalisation of the Australian shipping industry in Australia. As you can see, and as just about every speaker who has contributed to this debate has made the observation, with over 99 per cent of our trade task being reliant on international shipping and being one of the most shipping-dependent nations on earthbeing an island nationand very trade reliant, it is absolutely critical that we have a vital and revitalised shipping industry in this country.

After 11 years of neglect by those opposite I congratulate the minister for having the fortitude to bring this reform process into the House. I congratulate him for having undertaken extensive consultations with industry and for ensuring that all the key stakeholders have been involved in the preparation of the reports, the consultation process, and have had access to the exposure draft of this legislation and have had their input to the exposure legislation considered. I congratulate him for ensuring that, at the end of that process, we have five excellent bills to bring before the House, which will go a long way to ensure that we have a vital shipping industry now and into the future. That will be a good thing: a good thing for all Australians and a good thing for the port at Port Kembla in my electorate of Throsbyhopefully employing more Australian seafarers and ensuring it has a vital future and continues to contribute enormously to the future of the economy in the Illawarra. I commend the legislation to the House.