SEACHANGE

Union vision for Australia to become an Asia Pacific maritime hub

The crew of the Teekay bulk carrier Pioneer are uneasy. Oil prices are skyrocketing and the bosses have been complaining about costs. The Pioneer does the sugar trade between Mackay, Sydney and Singapore.

"We sail internationally so they could use that as an excuse to get rid of the Australian crew any time and replace us with cheap foreign crew," said IR Craig Brody. "I want to see the government lock in cabotage and bring back tax incentives. If it keeps up the way it's been going, then by 2010 you can kiss goodbye to Australian seafarers."

HOWARD REGIME

The dire state of Australian shipping is the inevitable legacy of the former Howard government. For a decade Australia had an anti Australian shipping policy. All previous incentives for Australian shipping were removed. Instead the government provided open slather for foreign ships in our domestic trade, effectively handing over on of the most critical industries and our economic sovereignty to foreign interests.

Within six months of the Rudd Labor Government coming to power, it has already moved to guarantee the future of Australian shipping and Australian seafarers - providing transparency on the use of all permits for foreign vessels working on our coast and setting up an inquiry into Australian shipping with the stated aim of revitalising the industry (the House of Representatives Infrastructure and Transport Committee review of coastal shipping policy and regulation).

National Secretary Paddy Crumlin spoke in support of the union's submission at the inquiry's final hearing in Canberra on May 16. A delegation of rank and file seafarers from Sydney, Southern Queensland and Victoria accompanied officials down to Canberra on the day.

"Paddy was a great representative, and not just of the union and its members - he represented the best interests of the Australian community," said seafarer Joe Deakin from the Tidewater rig tender Osa Vigilant on the NW Shelf. "This issue affects every Australian. Shipping is a sovereign thing and something we need to protect not just for maritime workers."

The Maritime Union submission argues that our merchant marine is vital for exports, national security, domestic transport and tackling climate change. With the right policies in place 20 new ships could serve Australian domestic ports, the region and our export trade with Australia becoming a regional centre for maritime trade and training in the Asia Pacific.

"Australia should be the heart of Asia Pacific maritime commerce," said Crumlin. "This is our vision for the future."

The union is now optimistic that the Australian shipping industry is about to undergo a sea change. And it is not alone. Its vision for a national fleet servicing the coast, the region and our exports is shared by significant industry, business and government players. Major Australian companies involved in the resources and manufacturing sectors are now looking to invest in Australian shipping as a stronger, more reliable service for Australia's export industries, than deregulated foreign shipping. The union has noted that industry failed to invest when freight rates were low in the 1990s and are now paying the consequences.

Australia is an island trading nation reliant on shipping for 99 per cent of its trade. It needs ships. The union submission argues on economic, social, environmental, employment security and defence grounds for the regeneration of the industry.

The submission urges the government to:

• put a stop to widespread rorting of the permit system, which has allowed foreign vessels to dominate our domestic trade

• provide incentives such as accelerated depreciation, ships' capital grants and the PAYE rebate to Australian shipping companies

• promote the greenhouse credentials of shipping

• support the development of coastal highways and hub ports in line with rail and road via infrastructure spending under Auslink

• invest in maritime skills to address labour shortages.

These measures could lead to a vast reduction in foreign ships carrying cargo between Australian ports with the next five years - the MUA objective would be to see no more than 5-10 per cent compared to almost 30 per cent at present.

NEW SHIPS

In their place seven new vessels could enter the coastal trade between Australian domestic ports, servicing the Sydney to Perth liner trade, SeaCorp's West Coast trade to Darwin and the multi purpose coastal trade. Our key manufacturing supply chains such as cement, steel, oil and clean petroleum could all be serviced by Australian-flagged ships.

Regionally Australian ships should return to the New Zealand, Indonesian, Timor PNG and Pacific Island trades as well as providing training for Timorese and Pacific Island seafarers.

Australian shipping also has a role to play carrying our exports of iron ore and coal. LNG exports alone are estimated to need 20-30 new tankers for future projects. The union submission also points to the potential for Australian investment in oil rigs and floating production facilities. Drilling rigs are currently hired from overseas for more than $400,000 a day. Australian passenger cruise vessels and new defence ships are also needed.

LEVEL SEAS

But for this to all happen the union argues Australian shipping must have level seas. Foreign vessels permitted to work on the Australian coast must provide international crew with the same labour standards as Australians under collectively bargained agreements - a principle the maritime unions won in the High Court in their case against CSL in 2003, that was subsequently overturned by the Howard government under WorkChoices.

LEGAL BOYCOTTS

The union calls on the government to ensure foreign ships trading on our coast adopt a labour standards clause with minimum rates of pay and conditions under an ITF agreement. The ships should also demonstrate a genuine link between the real owner of the vessel and the flag state in accordance with the UN Convention on the Law of the Sea.

Only ships registered in flag states that have ratified core ILO and IMO conventions under IBF or ITF agreements would be accepted in Australian ports. As in Europe, the union should have the right to boycott ships that do not meet world standards.

FISCAL SUPPORT

The union advocates restoration of Keating government financial incentives such as accelerated depreciation to stimulate capital investment in ships and the capital grants scheme. The union also suggests ship owners be allowed to opt either for a tonnage tax or normal corporate tax scheme.

To encourage Australian participation in international shipping, the union submission calls for the 1994 PAYE rebate system to be reintroduced. Under this scheme Australian crew on international voyages receive their net pay, with the ship owner retaining the tax component.

Internationally the union has successfully negotiated for the big shipping companies to fund developed economy ratings through the International Bargaining Forum. The IBF agreement now requires ship owners to pay US $10 per month for every seafarer they employ into an international fund. The money is used to support jobs for ratings from developed economies.

The Asian DER fund will collect around US$10 million per annum from shipping companies subsidising employment of seafarers from developed economies such as Australia, Japan and New Zealand. This funding combined with the PAYE rebate could support up to 10 international ships to fly the Australian flag.

SKILLS CRISIS

The global shortage of seafarers is now critical. The labour pools in Asia and Eastern Europe have now been all but exhausted.

The MUA submission highlights the urgent need to train a new generation of seafarers. Union research shows Australia needs to train 500-1000 ratings over the next 10 years to meet demand and a further 1000 to replace those seafarers approaching retirement. The Australian Maritime College, Challenger TAFE, Hunter Institute and the Maritime Skills Centre make Australia ideally placed as a training hub for the region linked with regional centers in PNG, Indonesia and the Pacific Islands.

HUB PORT

Hub ports, such as Singapore, Rotterdam and increasingly Auckland are one-stop drop-off points for international cargo that is then fed into the domestic transport chain. It leads to high port productivity, as cargo is all-off and all-on, rather than shuffling boxes around. And it creates the potential for coastal ships to pick up for transshipment interstate.

The union submission calls for government to support this proposal. Across the Tasman, in New Zealand, the port of Auckland is already moving to become a hub port, not just for New Zealand but also for the region, including Australia.

COASTAL HIGHWAYS

Transshipment of containers by sea, rather than road reduces urban congestion, infrastructure costs and environmental concerns. Ocean highways require no road upkeep, bridges, tunnels or track maintenance. The European experience is that coastal shipping can curb the increase in heavy vehicle road traffic and bypass vehicle bottlenecks.

BOTTLENECKS

One of the strongest arguments for Australian flagged ships in the union submission is the damage Free On Board (FOB) shipping that now services our coal industry has done to our reputation as a reliable exporter.

To date the long ship queues off Dalrymple Bay and Newcastle causing billions of dollars in demurrage costs and delays to coal exports have been largely blamed on the lack of port infrastructure. In reality the problem is more down to the FOB ship contract system. Under FOB Australian companies are the ones liable to pay demurrage (waiting time charges) when these vessels are delayed. This leaves no incentive for ship owners to keep to schedule and to maximise ship productivity.

"The propensities of Australian commodity exporters and government to place a low value on the shipping component of the overall supply chain, from mine to export destination, is the core of the dilemma facing Australian exporters," the union submission argues. "FOB shipping terms create a dysfunction in the supply chain...The exporter has minimal influence over the scheduling of the ships... Yet the exporter is paying the demurrage while the ships sit in queues off Australian ports, typically at a cost of up to $1million per day according to ACCC estimates. There is no incentive for the foreign ship operator to find alternative cargoes or reschedule the ship and no ability for Australian regulators such as the ACCC to ensure ship arrivals match loading times slots."

As well many FOB ships are substandard Flag of Convenience vessels with poorly trained, fatigued foreign crew, leading to incidents such as the Pasha Bulker grounding off Nobby's Beach in Newcastle.

FOB shipping means the Australian exporter loses all control over shipping - its scheduling, its cost, its standards and its efficiency. The MUA submission compares coal exports to LNG where there has not been one safety incident or ship delay in over 2,500 shipments during nearly 20 years of exports and not one dollar paid in demurrage costs. The savings in demurrage in the coal industry alone could fund the building of six new ships annually.

GREEN SHIPPING

The Australian Institute report Climate Change and Australian Coastal Shipping commissioned by the union in 2007, found coastal shipping is the least energy and emission intensive and has positive greenhouse credentials, being 10 times more energy efficient than trucks. Despite its age the Australian fleet is cleaner and greener than international shipping due to its high standards. And as the fleet is replaced with new tonnage over the next few years, its efficiency and greenhouse credentials will further improve with new technology.

The report found the potential for 200 container shiploads to be taken off roads and sent by sea. That's 637 fewer truck movements (222 trucks) annually off the east west highways - 594 fewer trucks if we include the North South Corridor.

NATIONAL SECURITY

This September Australia will, for the first time, honour those seafarers who gave their lives in war . In WWII alone, 29 Australian ships were sunk by mines, torpedoes, shelling or bombing. And more recently, Australian ships supported the Australian armed services in humanitarian missions such as in Timor Leste. The union submission notes the importance of a strong merchant marine in the defence of the nation.

The Maritime Union has played a key role in supporting tightened port security, being represented on the Maritime Industry Security Consultative Forum, the Maritime Transport Security working group and port security committees. However the union submission argues that Australia has yet to ratify the ILO convention on seafarers' identity documents or require the same high standards of background checking of foreign crews as it does of Australian crews.

"The MUA is of the view that the implementation of the Maritime Crew Visa does not adequately plug the current security weakness that allows foreign seafarers to enter Australian waters and ports with security and background checks which do not match the standards applied to Australian seafarers and port workers," the submission says.

This too is a legacy of the Howard government.

"If you haven't got a shipping industry as an island nation, you're vulnerable," said Joe Deakin from the Osa Vigilant. "If you don't have your own fleet you're in trouble, especially in these volatile times. Australia needs a shipping industry and the previous government was all about the demise of the shipping industry."

The union submission has been distributed to branches and ships and is available on the Internet.

http://www.aph.gov.au/house/committee/itrdlg/coastalshipping/subs/sub45.pdf

The inquiry will report to parliament in October.