There has been some discussion around the removal of the Australian crew from the refined sugar vessel the MV Pioneer despite extensive reporting at Monthly meetings on the circumstances and the full acceptance of the crew of the Pioneer on it’s withdrawal on economic grounds due to it’s highly exposed involvement to the international trade in refined sugar. The National Council of the union at its October meeting unanimously endorsed the position as indicated.
It is our intention to outline some of the background and facts relating to this matter.
Our union is under significant attack and faces difficulties in many areas. Some of the attacks are politically motivated. These are driven by the forces of big capital and often headed up and certainly supported by the new conservative Abbott Government. Many of the situations we face in the union however are based on broader economic problems associated with the general state of the economy and in particular the dire state of the Australian manufacturing industry. This affects us particularly in the blue water shipping industry and in coastal trading.
It is extremely important that we understand the nature of the problems we face in order to determine the best approach in dealing with them and to ensure our responses are based on unifying the position of working people and not used for ulterior motives that can create division within the union.
After exhaustive campaigning under extremely difficult political circumstances the union was able to secure a shipping reform process in 2012 that provided some basis for the development of the Australian shipping industry. These changes were driven by the Rudd-Gillard Labor Government, with Shipping Minister Anthony Albanese developing a reform package in a difficult hung parliament environment. This lead to a situation whereby the final package did not deliver everything that the union wanted but we considered it a major step forward from a legislative perspective compared to the previous shipping environment where the industry was going under due to the misuse and abuse of Single Voyage Permits (SVP) and absolute open free trade policies. The shipping policy was nation building policy and a brave political move in the face of the general pattern of liberalisation of trade and open free market philosophies which had dominated the Australian political landscape for decades.
The shipping reform package consisted of a range of measures including:
- - Taxation incentives
- - Accelerated depreciation
- - Preference of cargo for General Licenced vessels
- - New procedures for temporary Licences
- - An international register
The new Conservative Coalition government when elected came out swinging immediately with comments by the new shipping minister Warren Truss that he sought to undermine and wind back the new shipping reform process. The conservatives saw the shipping reform package as a form of protectionism which was diametrically opposed to their free trade globalisation economic policy and view of the world. They went further identifying the reform process as a sop to the MUA by the Labor Government(s).
The attacking comments by the coalition are consistent and sustained and it is clear that the Government is waiting for the right moment to attack the union and completely undermine the developments achieved in the reform process. The recent MUA AGM's identified that much of the union's resources and focus regarding the long term viability of the Australian shipping industry will be based around campaigning to protect the existing legislation.
It is clear that the conservatives are seeking to undermine the new shipping reform legislation because it is NOT beneficial to their constituents in big business. They are seeking to undermine the process to open up the coast to the largest shipping monopolies and conglomerates.
At the same time as the owners of the Pioneer, Sugar Australia, announced they wished to remove the Australian crew, the Shipping Minister Warren Truss made a swingeing attack on the reform package. His utterings were nothing new as indicated by his comments three years ago where he said in an article entitled, 'Union protectionism sinks shipping reform proposals'. Truss went on;
"The opportunity for worthwhile shipping reform has been lost by the Gillard Government’s rush to pay back the Maritime Union and wind back past changes that have benefited the whole nation."
As soon as the coalition was in power they moved on shipping reform as reported in the Australian (Sept 19); 'THE Coalition is preparing to unwind parts of Labor's crackdown on cheaper foreign ships operating on Australia's coast.
The Australian can reveal that Deputy Prime Minister Warren Truss will streamline the system for applying for temporary licences to use foreign-flag ships, which he said had become "very difficult and restrictive" under Labor's controversial coastal shipping reforms.
Sugar Australia and the Pioneer
In August 2013 three weeks out from the September Federal Election Sugar Australia signaled their intention to place the Pioneer on the AISR. They were no doubt being steered politically in the timing of their announcement having been buoyed by the comments coming from Liberal-National Opposition, (soon to be Government) in making their decision.
In 2010 Wilmar bought 75% of Sugar Australia. Wilmar is a large agri-business multi-national out of Singapore. They took over CSR's sugar business, which was already running into considerable difficulties economically. These economic problems were well known to the crew through onboard information flowing from Sugar Australia. The problems were also well known to the AWU who identified that the Sugar industry was suffering great stress. The refined sugar business was suffering significant losses from not only imports but also as a result of the high Australian dollar.
The problem for the Pioneer and Sugar Australia were fourfold;
- - When the vessel was commissioned the A$ was at US67cents and had now been at parity or above for some time
- - The unique nature of the vessel gave no possibility of carrying any other cargoes to defray Sugar Australia losses therefore the voyage pattern could not be triangulated to reduce the ballast legs back to Mackay as the only load port. This saw the vessel in ballast 50% of its voyage time.
- - It spent more time in the international trade route leg to Singapore than on the coastal leg and the stark reality is that with Australian rates we cannot compete in the international trade. The figures Sugar Australia tabled highlighted that fact.
- - The fact it was a one cargo owner/user specific vessel that did not operate as a conventional bulk carrier saw the vessel fall outside the general parameters of the total taxation regime of the shipping reform and prevented Sugar Australia gaining full advantage of the tax breaks under the policy; they could only receive some payroll tax concessions. An oversight which given time may have been addressed with the Labor Government but that had not been raised with us previously.
The MUA made its intention clear to Sugar Australia that we would in no way accept the vessel moving to the AISR. The MUA made specific demands that if Sugar Australia was sincere about the economic losses within the company they would have to open their books to the MUA and verify their position.
The company had made it clear that unless the losses were addressed and measures were put in place to deal with the cheap imports of sugar from Thailand into Singapore, their major market, that Sugar Australia would look to closing down Australian refineries at the cost of hundreds of manufacturing jobs.
After considerable pressure was placed on Sugar Australia from the MUA, ITF, AWU and ITUC the company finally conceded to a high level meeting with the MUA to consider the issues.
At this meeting Sugar Australia opened their books to the MUA. The economics proved to be correct and presented an extremely difficult situation for the union. The company was consistently losing huge amounts of money. In the last three years their losses amounted to between $10-11 million a year. They further went on to demonstrate the high costs of an Australian crew where the vessel spent the majority of the time in the international trade, competing on international not domestic freight rates. The reality is that the Australian total crew cost equated to around $6.6 million a year. An FOC crew cost is around $1.8 million a year. This differential is not only based on wages but factors such as superannuation, Seacare levy and most significantly leave factors - the differential here is our two crew duty system of 1:1 versus an FOC leave factor of 3.6:1. The same economic relativities have meant that Australian crewed vessels cannot compete in international trades. The North West LNG ships are the only exception due to the unique industrial arrangements and the high value of the cargo. The Bluescope vessels triangulate to North East Asia and the Iron Ore Ports in the North West and Port Kembla, but this proves cheaper than just servicing the domestic iron ore requirement due to the shorter ballast legs in the triangulated service.
Having the blue and consequences
The MUA looked hard and long at the situation and the union's National Council endorsed the views formed arising out of the high level meeting with Sugar Australia.
Arising out of that high-level meeting the process of formulating an MOU with Sugar Australia was reached that dealt with a range of issues arising surrounding the vessel and the dire state of the sugar manufacturing industry. Sugar Australia further agreed to not pursue placing the vessel on the AISR.
The MUA formed the view that arising from Sugar Australia's agreement to enter into an MOU with the union around a range of issues and not pursue the AISR that we would reluctantly accept the removal of the crew understanding that we were not in a strong position to win such a dispute.
The union recognised that considering the massive losses that there would be no court in the land that would rule our way or give us the capacity to sustain a dispute. Sugar Australia would not move on the crewing issues and it is not possible to force a company to accept continuing losses of around $10 - 11 million a year through a sit-in. Not that all those losses were based on crew cost but did account for just under half the total. Management and workplace redundancies around the Sugar Australia business also took place seeing many of the middle and upper level management cut and much of the remaining business structure moved offshore; this wasn't a matter limited to the Pioneer crew. We knew that a dispute would have inevitably played out with s418 orders from FWC followed by Federal Court damages plus the opportunity for the coalition, with Sugar Australia in tow, to progress the anti-shipping reform agenda. This was a planned assault on the union that was designed to drag us down in a major way.
Our approach to the issue effectively neutered the coalition's capacity to attack us. It took Sugar Australia out of the fray regarding the shipping legislation to the extent where they agreed to advocate improvements to shipping legislation to the coalition government and work through those issues with the MUA prior to enacting that advocacy.
We were acutely aware that when other vessels had left the coast due to reduced cargo volumes and manufacturing industry problems that we got to a similar position with those companies after a dispute. The previous disputes delivered us the outcome that was arrived at with Sugar Australia and the union's National Council and the Pioneer’s crew unanimously endorsed the union’s strategy on the Pioneer.
Around half the Pioneer’s crew received significant redundancies and the remainder were engaged throughout the broader TK fleet. A further range of measures were agreed including bonuses of around $1900 per crew member, company sponsored revalidation and $5000 worth of skills training per crew member.
The path taken by the union neutralises the entrenched campaign against cabotage by the Abbott Government and certain domestic shippers of cargo and secures arrangements for carriage of raw sugar contracts, which are currently carried by the CSL Brisbane. This effectively ensures some contractual security for this other Australian crewed vessel. There would have been further inevitable attacks on the Australian shipping industry and seafarers as being solely responsible for the closure of the Australian sugar industry that would have flowed to a government and employer assault on the shipping legislation.
Throughout the entire process the crew of the Pioneer were fully appraised and fully supported the position of the union. This is reflected in the crew’s resolution of the 14th October:
- - We the combined MUA members on board the Pioneer refuse to be used as part of Warren Truss and the Liberal Governments anti-shipping campaign.
- - We call on the owners of the Pioneer, Sugar Australia, to cooperate with the MUA on all facets of the agreed MOU, including making sincere representation to government about the overhaul of shipping policy that is advantageous to the development of Australia’s shipping industry.
- - We reject placing the vessel on the AISR as this was developed to assist the building of Australian Shipping not a tool for its demise.
- - As working Australians we recognise and are conscious of the need to build and support Australian Manufacturing as a basis of developing the shipping industry.
We would also at this time like to thank the National Officials, National Office staff and branch officials involved in this issue, although the final result is not what any of us wanted the effort and dedication shown by all was exemplary, and we need it to be known by all that the decisions made by National Office were and are supported unanimously by all 18 MUA members on the Pioneer.
Yours in Unity,
Crew of MV Pioneer.
Yours in Solidarity,
Assistant National Secretary Warren Smith
South NSW Branch Secretary Garry Keane
Sydney Assistant Branch Secretary Joe Deakin
Sydney Assistant Branch Secretary Paul Garrett