Retired US Rear Admiral Appears at Inquiry into Flag of Convenience Shipping

ABC World Today Radio transcript from last week's Senate Inquiry into Flag of Convenience shipping. 

KIM LANDERS: A retired rear admiral with the United States Navy has expressed concern that deregulating the Australian shipping industry could have consequences for national security.

Robert Reilly has appeared at a Senate committee hearing, examining the increased use of so-called flag of convenience shipping.

Under the practice, a foreign ship can enter Australian waters with a flag that does not represent the nationality of the ship's owners.

Retired rear admiral Reilly says the US has long limited this practice, and he's concerned that Australia is going down a different path.

Thomas Oriti reports.

THOMAS ORITI: The inquiry began with the Sage Sagittarius, and more particularly, the suspicious deaths of three seafarers on board.

They died over a six-week period in 2012, as the ship was ferrying coal between Australia and Japan.

Sage Sagittarius is known in the maritime industry as a "flag of convenience ship" (FOC).

And according to the national coordinator of the International Transport Workers Federation, Dean Summers, it's a concerning practice.

DEAN SUMMERS: This is what represents flag of convenience. This is what the flag of convenience system provides for, it doesn't generate this but it provides for this. 

If this is the system that provides for FOC and if the Australian Government is intent on doing away with the Australian industry, then this is the industry, this is the style of shipping, the registration of shipping that immediately comes in and fills that vacuum. 

THOMAS ORITI: Dean Summers was giving evidence at a Senate inquiry into the increased use of flag of convenience shipping. And the case of the Sage Sagittarius was a core part of today's hearing. It's a Japanese-owned ship, but carries the flag of Panama, and relies on a Filipino crew.

The motives are often to reduce tax burdens and to use cheaper labour.

But Mr Summers told the hearing there are challenges.

DEAN SUMMERS: Last week I was called to a ship in Newcastle with the death of a young Chinese seafarer. We were stopped from getting up the gangway. It was a flag of convenience Marshall Island vessel called the Yangtze Oasis. 

We couldn't get on. I tried to engage the owners. I went to all of our intelligence organisations, our intelligence opportunities to find out who owned it. 

THOMAS ORITI: He still doesn't know who owns that ship.

The International Transport Workers Federation and the Maritime Union have expressed concern about the Federal Government's plans to deregulate the shipping industry.

They claim that if that happens, there'll be a lack of rules governing the use of Australian labour along the coastline. And as a result, companies will naturally turn to the cheapest option: labour, often from unstable countries with lax regulations.

Drawing on his 34 years of active military service, retired rear admiral Robert Reilly Junior told the hearing that's a concern. He says the US has had regulations in place for decades.

ROBERT REILLY JUNIOR: If you were going to operate a vessel in the case of the maritime community, that operates from a US port to a US port, that vessel will be built in the United States, it will be crewed by US license and unlicensed mariners and it can be owned by, it is to be owned, at least 75 per cent by a US company. 

THOMAS ORITI: WA Labor Senator Joe Bullock then told the retired rear admiral that Australia was thinking of heading down a different path.

JOE BULLOCK: In a world consumed with the threat of terrorism, if we are serious about defence, how could it be possible to take a different position to the position you've taken in this paper?

ROBERT REILLY JUNIOR: Well, I don't think you could, Senator. 

JOE BULLOCK: Thank you for the answer. 

ROBERT REILLY JUNIOR: This requires someone to take the long view. 

THOMAS ORITI: Paddy Crumlin is national secretary of the Australian Maritime Union.

He told the hearing that deregulation is a dangerous move.

PADDY CRUMLIN: We've lost the plot in terms of the regulation of our shipping services. I mean this is just, this is the joke that we've become. 

THOMAS ORITI: In its submission to the inquiry, the Department of Immigration and Border Protection states that terrorist groups and organised crime syndicates could take advantage of flag of convenience shipping. And it's stressed the need for the strictest regulatory enforcement.

The committee is due to report back in early February.

KIM LANDERS: Thomas Oriti.