Crumlin Talks Up Economic Benefits Of Shipping Reform

Maritime Union of Australia National Secretary Paddy Crumlin has talked up the productivity and economic benefits of the Federal Government's shipping reform package.

Mr Crumlin said that having more Australian-flagged ships will lead to the development of maritime economic clusters.

This means insurers, repairers and suppliers that will bolster the range of the maritime skills base and stimulate economic activity.

"Better taxation arrangements for ships will mean that it is affordable - and profitable - for Australian companies to invest in shipping fleets," Mr Crumlin said.

The Australian newspaper reported that Labor's tax holiday for the local coastal shipping industry will cost the budget more than $250 million, it was revealed yesterday.

Infrastructure Minister Anthony Albanese yesterday introduced to parliament the long-awaited package of five pieces of legislation aimed at reviving the local shipping industry. The Australian fleet has plunged from 55 to 21 ships, and just four of these operate on global routes.

Just half of 1 per cent of that trade was carried on Australian-flagged ships, Mr Albanese said.

Under the proposed laws, Australian-flagged ships will receive tax incentives that the government says will tackle cost disadvantages faced by Australian ships when they compete against cheaper foreign-manned vessels subsidised by foreign governments.

The tax measures will cost $254.5m over the forward estimates period, starting at $49m in 2012-13 and rising to $70m in 2015-16, an explanatory memorandum reveals.

This will fund a holiday from income tax for Australian ship owners and allow accelerated depreciation on vessels.

As well as the tax measures, the reforms overhaul the system for issuing permits to foreign ships. Labor had previously accused the Howard government of handing out the foreign voyage permits like ''confetti''.

The Australian Shipowners Association welcomed the laws, saying they would level the playing field by making Australian shipping more competitive. But a group of Australian bulk shipping users, led by Cement Industry Federation chief executive Margie Thomson, demanded a Productivity Commission review of the Coastal Trading Bill.

Ms Thomson said the objects of the bill should be expanded to ensure that an internationally competitive shipping service was available because it was already cheaper to ship product from factories in China to Australia than it was to move Australian goods to market from one Australian port to another.

The reforms have been debated, with shipping users warning that the plans represent a protectionist maritime policy that will drive up costs.

But Mr Albanese yesterday insisted that the reforms were pro-Australian shipping.

He argued Australia had one of the most liberal coastal trading regimes and that there remained a role for foreign-flagged vessels -- which had been a concern for manufacturers who feared a restriction in cheaper foreign-manned ships would make them less competitive.