Referral
1.1
On 5 December 2018, the following matters were referred to the Senate Rural and Regional Affairs and Transport References Committee (the committee) for inquiry and report by the second sitting day in August 2019:
The policy, regulatory, taxation, administrative and funding priorities for Australian shipping, with particular reference to:
new investment in Australian ships and building a maritime cluster in Australia;
the establishment of an efficient and commercially-oriented coastal ship licensing system and foreign crew visa system;
the interaction with other modes of freight transport, non-freight shipping and government shipping;
maritime security, including fuel security and foreign ship and crew standards;
environmental sustainability;
workforce development and the seafarer training system;
port infrastructure, port services and port fees and charges; and
any related matters.
1.2
This inquiry lapsed at the end of the 45th Parliament; however, on 23 July 2019, the Senate agreed to the committee's recommendation that this inquiry be re‑adopted in the 46th Parliament for inquiry and report by 5 December 2019.
1.3
On 15 October 2019, the Senate granted an extension of time to report until the Wednesday of the first sitting week in June 2020.
1.4
On 9 June 2020, the Senate granted a further extension of time to report until 9 December 2020.
1.5
On 9 December 2020, the Senate granted a further extension of time to report until 15 December 2020.
Conduct of the inquiry
1.6
The committee received 30 public submissions. A list of submissions is included at Appendix 1, and public submissions have also been published on the committee's webpage.
1.7
All correspondence and evidence previously received for the inquiry during the 45th parliament was made available to the committee.
1.8
The committee held two public hearings in relation to the inquiry in the 45th parliament. The hearings were held in Melbourne on 13 and 14 March 2019.
1.9
In the 46th parliament, the committee held an additional three days of hearings in Canberra on 6 February 2020, 8 September 2020, and 9 September 2020.
Acknowledgements
1.10
The committee would like to thank all the organisations and individuals who provided written submissions to the inquiry, or provided evidence at the public hearings held in Melbourne and Canberra.
References
1.11
References in this report are to individual submissions as received by the committee; not to a bound volume. References to Committee Hansard are to official Hansard transcripts, unless otherwise stated. Please be aware that page numbers may vary between proof and official Hansard transcripts.
Structure of the report
1.12
Chapter 1 provides background and context to the committee's inquiry. The chapter includes an overview of shipping, including international shipping and global trade patterns; Australian shipping; the evolution of domestic shipping policies, regulatory initiatives, and incentives which have been proposed over time in an effort to reinvigorate and grow Australia's maritime and shipping sector; and key government reforms over the last decade. In undertaking this inquiry, the committee also drew on information and evidence gathered during previous inquiries it, and others, have undertaken. The chapter concludes with a discussion of these.
1.13
Chapter 2 provides an overview of, and discussion on, Australia’s coastal shipping framework and the three-tiered licencing system in place since 2012. It also provides a discussion on international shipping, the availability of liner cargo shipping services, and Australia’s international shipping register.
1.14
Chapter 3 begins by providing a cross-section of suggestions made by participants to promote the general use of shipping (i.e. irrespective of the ship and crews nationality) as an effective and efficient mode of transport. It then continues by highlighting a number of suggestions aimed at specifically promoting the use of Australian ships and Australian crews. For example, expanding taxation concessions and developing a strategic fleet.
1.15
Chapter 4 outlines some of the concerns raised in relation to maritime training and development, including the complexity of the qualifications framework; gaps in training; declining opportunities; the ageing workforce; and skills shortages.
1.16
Chapter 5 examines the issue of environmental sustainability, including the relevant regulatory frameworks and various proposals which aim minimise the impact of shipping on the environment—including the reduction of sulphur content in fuel.
1.17
Chapter 6 provides a discussion on security issues, focusing on fuel security in Australia and homeland security. The chapter also examines general maritime safety and the role ship and crew standards play in promoting it. This section also discusses the key role that AMSA has in enforcing compliance with various standards and the ATSB’s role in investigating accidents and other occurrences, with the aim of improving safety and public confidence.
1.18
Chapter 7 examines the issue of port infrastructure, including the interface of shipping with other modes of freight transport and the constraints on current infrastructure. It also outlines some of the issues relating to port services, including port fees and charges; container and stevedore charges; port automation and the impact these have on competition.
An overview of shipping
1.19
The following section provides a brief history of international shipping, including an overview of global trade patterns and current trends, as well as discussing the domestic Australian shipping industry.
International shipping
1.20
Shipping plays a vital and significant role in today's global economy, with transportation via sea routes long considered the most efficient and economical mode of transport. As the world has continued to develop, and the ship-building industry has continued to grow, proximity to new materials and access to markets are the primary factors which have shaped the world economy. Given today's trade patterns and shipping routes, international trade has evolved to the point where almost no individual country can be fully self‑sufficient. Every country is involved, at one level or another, in obtaining the commodities it lacks, and selling those it produces.
1.21
Shipping has always provided the only really cost-effective method of bulk transport over any great distance, and the development of shipping and the establishment of a global system of trade have moved forward simultaneously. As the movement of goods and trade has continued to grow, shipping has become the primary mode of transport for the vast majority of trade goods world‑wide, and advances in technology have seen shipping become an increasingly more efficient and faster method of transport. Over the past forty years total seaborne trade has more than quadrupled and continues to grow steadily. In the context of the global economy, the contribution made by shipping as a major industry in its own right is significant, and this has become increasingly so for the developing world.
A brief history of international shipping and trade
1.22
With approximately 80 per cent of global trade by volume being carried by sea and handled by ports, maritime transport plays a central role in international trade. As countries around the world have become increasingly connected and interdependent, the scale of global trade has also continued to increase. In 1960 global merchandise exports totalled US$130.5 billion, while in 2017 this had risen to US$17.7 trillion. This represents a growth of 9 per cent annually and, when expressed as a proportion of Gross World Product (GWP), global merchandise exports reached 21.9 per cent (compared to approximately 9.6 per cent in 1960).
1.23
Since the 1950s this growth has been driven by reductions in trade barriers, the increasing influence of the World Trade Organisation (WTO) and efforts to promote and increase competition. The increase in global merchandise exports has also had a major impact on how countries produce and consume goods. The immediate post‑war years saw the production and consumption of goods largely taking place within countries' borders. However, during the past 25–30 years, global trading has seen the place of production increasingly separated from the place of consumption.
1.24
East Asia provides one example of the benefits that have flowed from a competitive, multilateral trade system. Starting with Japan in the 1960s, post war agricultural and war-torn economies (including Hong Kong, Singapore, South Korea and China) have evolved and become developed economies. Improved economies have led to higher standards of living, and a growing middle class, which in turn has seen East Asia match North America and Europe as a driver of global consumption.
1.25
Increasing global trade has also brought about changes to shipping practices, and, as the dominant mode of freight transport, the shipping industry has sought to improve the efficiency of global supply chains. In practical terms this has meant a growth in containerised trade, which, in comparison to earlier forms of shipping, seeks to minimise freight handling costs.
1.26
The development of containerisation has dramatically decreased the cost of shipping general cargo merchandise and, as noted previously, has made it economically viable to separate the production of a vast amount of manufactured goods from the location of their consumption. At the same time, reduced trade barriers (which have resulted from the development of a multilateral trade system) have enabled the establishment of global supply chains that span multiple countries. These supply chains have been able to take advantage of the comparative benefits offered by various countries, and by doing so have been able to increase the efficiency with which merchandise, goods, and services are produced.
1.27
As volumes have increased the size of container ships has also increased. These days the largest container ships, by length and tonnage, are approximately 400 metres long, weigh 218 000 gross tons, and have 200 000 deadweight tonnage (DWT) of carrying capacity.
1.28
There are, however, both practical and economic limits to how much larger container ships will be able to grow; particularly given the physical constraints of port facilities, and the cost of using the larger container ships outside the world's larger, better-equipped ports. Because of their size, the Ultra Large Container Ships (ULCS) have an impact on both physical space and the use of equipment, and to service these larger vessels efficiently ports need to have appropriately sized infrastructure.
1.29
Economic limitations can also have an impact on the use of larger container ships outside major ports such as Shanghai, Singapore, and Rotterdam. ULCS are most efficient when their capacity is sufficiently used to transport cargo between ports that have invested in appropriate infrastructure, and that can accommodate the large container ships.
1.30
Larger container ships are frequently used on the long distance east-west routes between the large transhipment ports that serve as hubs in the network, such as the high-density Shanghai–Rotterdam route. The east-west routes are complemented by north-south routes that connect countries and regions including Australia, Africa, South America, and North America to global transhipment ports in a relay pattern. Australia is also served by a north-south route that connects Australian ports to global transhipment hubs in Singapore, Shanghai, Hong Kong, and other East Asian countries on a relay pattern.
Global trade patterns
1.31
Global trade patterns, which are currently dominated by east-west flows, can impact the availability of container shipping services to and from Australia. In broad terms, Australia's isolation and geography does also restrict access to some of the main container shipping routes. This means that:
Australia has a lower frequency of liner shipping services, meaning it can be challenging to access container shipping services of adequate frequency and reliability; and
a larger amount of Australian container imports and exports transition through transhipment hubs, such as Singapore, where delays can result in additional cost on Australian import/export supply chains.
1.32
Australia exports a substantial volume of bulk cargo, including commodities such as iron ore and coal. To ship these types of commodities, exporters generally charter vessels for a specific voyage (or series of voyages to a specific place). As a result, Australia generally does not have problems accessing adequate bulk shipping services.
Australian shipping
1.33
Australia is the fifth largest user of shipping services in the world. Many of Australia's import and export commodities are relatively dense, low trade commodities. As a result, shipping accounts for more than 98 per cent of Australia's total trade by weight. In 2012–13, total trade in commodities through Australian ports was 1.1 billion tonnes—comprising 992.7 million tonnes of exports and 140.2 million tonnes of imports. Sea freight accounted for 99.7 and 98.4 per cent of Australia's total merchandise exports and imports by mass, respectively, in the same year.
1.34
A smaller, but vital, part of Australia's domestic freight task (approximately 15 per cent), is carried by coastal shipping. In 2016–17, 35.2 tonnes of cargo was carried under coastal trading licence. Coastal trading is discussed further in chapter 2.
1.35
Australia’s maritime trade is largely dominated by the export of mining and agricultural products, and we are one of the top five international exporters of bauxite, alumina, iron ore, coal and liquefied natural gas. Statistics cited by the Department of Infrastructure, Regional Development and Cities indicated that in 2015–16:
1597 million tonnes of cargo moved across Australian wharves, an increase of 3.1 per cent on the previous financial year;
the combined value of Australia's seagoing international imports and exports was over $400 billion; and
there were 30 056 arrivals by 5540 individual international ships to Australian ports.
1.36
A variety of container ships are currently used to facilitate trade between Australia and international markets. However, as a consequence of the global trend toward the use of the larger container ships, Australian ports are increasingly visited by these larger vessels. In 2017, for example, approximately half of the container ships visiting Australian ports were over 50 000 tonnes (with a capacity of approximately 5000 to 8000 twenty-foot equivalent units (TEU) or more).
The history of shipping policy in Australia
1.37
Throughout the inquiry, stakeholders made the point that, as an island nation, Australia is dependent on a first-class shipping industry, especially with regards to defence, trade, and economic welfare. Stakeholders also pointed to Australia's increasing reliance on shipping and argued that the shipping industry, which plays a central role in Australia's supply chain, trade, and transport systems, is vital to the national economy.
1.38
While international shipping and coastal shipping are two distinct market sectors (each with a separate policy history), the two are inter‑related. Stakeholders suggested that just as understanding the history of global trade and international shipping provides context to recent developments in coastal shipping policy, the key to understanding the current status of Australia's maritime and shipping sectors is to undertake a historical examination of shipping policies, regulatory initiatives, and incentives over time.
1.39
Historically, coastal trading (and various aspects of maritime navigation) was regulated by the Navigation Act 1912 (the Navigation Act). Under the Navigation Act, all ships engaged in coastal trading were required to hold a licence, and at the time of the Act's commencement the conditions placed on licence holders largely related to standardised pay, seafarers' conditions, and employment levels. The Navigation Act also contained Australia's cabotage regime and endeavoured to balance the need for services with the availability of British, and then Australian, ships.
1.40
Single and continuing voyage permits, which allowed an unlicensed British ship to engage in coastal trading, were initially introduced in 1921. Generally, these types of permits were only granted when the minister was certain that no licensed ship was available (or that the service as carried out by a licensed ship would not be adequate).
1.41
In September 1969, the government-owned Australian National Line (ANL) began international services. These services, launched at a time of increasing 'containerisation', offered ‘the prospect of reducing crewing requirements and costs – something long seen as precluding Australian involvement internationally’. ANL entered the United States and Europe trade at a time when the cost effect of container operations were largely unknown. The company also entered the Japan trade, and used it as an opportunity to introduce roll-on/roll-off technology (which had been successful in the Bass Strait market) into a deep sea trade.
1.42
Internationally, economic conditions during the 1970s were difficult, and ANL was faced with an uncompetitive cost structure and high crewing levels on the one hand, and a shortage of owner-supplied equity finance and high debt servicing costs on the other. Recession conditions and financial losses in the early 1980s saw ANL receive a financial assistance package from the incoming Hawke Labor Government in 1983, and the company rationalised its services— both domestically and internationally—and withdrew from the United States trade.
1.43
At the same time, the Hawke Labor government also adopted (and extended) a strategy to revitalise the Australian shipping industry put forward by Sir John Crawford. The focus of the strategy was on providing benefits to bulk international shipping, and it recommended that investment allowances, linked to crewing reductions, should apply to international shipping (as well as to coastal shipping).
1.44
By 1994, with a reform program implemented by the Shipping Industry Reform Authority (and the shipping industry having invested approximately $1.6 billion in new shipping), Australia had one of the youngest fleets in the world—at an average age of eight years. Between 1988 and 1994, 36 new vessels were introduced into Australia's fleet—which represented a turnover of approximately 45 per cent.
1.45
The early 1990s saw structural reform of government enterprises and a policy focus which gave serious consideration to the sale of companies such as ANL. The Keating Labor Government's proposal to sell 49 per cent of ANL was, however, met with opposition—particularly from the Australian Council of Trade Unions—and the sale proposal was withdrawn in September 1994.
1.46
In 1996, the incoming Howard Coalition Government introduced a budget which withdrew all existing financial assistance measures for the shipping industry. The introduction of any new measures was made conditional on the cessation of labour pooling arrangements for seafarers. In 1997, following negotiation, the pooled labour scheme was abolished and replaced by company employment.
1.47
In November 1997, legislation was introduced into Parliament and set the groundwork for the privatisation of ANL. In 1998, the company was sold, with its trading name, to CMA CGM, a large French shipping line.
1.48
The 1990s also saw the end of an historic monopoly by Australian and New Zealand flagged vessels for trade between the two countries. However, regime changes made between 1921 and 2006 had the effect of gradually easing access to coastal trading for foreign-flagged ships— particularly when it was deemed necessary to supplement the Australian fleet.
Recent shipping industry reforms
1.49
In October 2008, the House of Representatives Standing Committee for Infrastructure, Transport, Regional Development and Local Government tabled its report Rebuilding Australia's Coastal Shipping Industry. The Chair's foreword noted that:
The strongest argument for revitalising Australia's coastal shipping industry is an economic one. A strong domestic shipping industry can assist in the alleviation of land transport bottlenecks, infrastructure constraints and environmental impacts, as well as provide economic benefits derived from the creation of local employment and the growth of maritime services. Australian defence, maritime safety and security could also benefit from an expanded coastal shipping sector.
1.50
The House of Representatives committee's report made a series of recommendations, and also argued that any new policy framework for Australia's coastal shipping industry should include:
reform of Part VI of the Navigation Act 1912, the Navigation (Coasting Trade) Regulations 2007 and the Ministerial Guidelines for Granting Licences and Permits to Engage in Australia's Domestic Shipping;
the implementation of a single national approach to maritime safety for commercial vessels;
the introduction of an optional tonnage tax regime in Australia that is linked to mandatory training requirements;
the re-introduction of accelerated depreciation arrangements;
a one year review of the Maritime Crew Visa;
amendments to the Seafarers' Rehabilitation and Compensation Act 1992 and the Occupational Health and Safety (Marine Industry) Act 1993;
the creation of a national port development plan to address current and potential capacity constraints in Australia's ports;
the creation of a national maritime training authority and the introduction of a national training vessel;
a review of Section 23 AG of the Income Tax Assessment Act 1936; and
the creation of a reform implementation group to implement any future Commonwealth Government reforms.
1.51
In December 2010, the then Minister for Infrastructure and Transport, the Hon. Anthony Albanese MP, released a discussion paper which outlined a framework for reform of Australia's shipping industry. The framework was intended to:
ensure Australia has a viable shipping industry, which is able to provide adequate coastal shipping services at a reasonable price for both customers and consumers (and which reinvests in its vessels when they reach the end of their economic lives);
ensure Australian shipping maintains—and potentially grows—its share of the national transport system to meet the growing transport task efficiently, effectively, safely and with the least impact on the environment;
provide opportunities to increase Australia's participation in international shipping, which reflects the significance of shipping to Australia's trade base and the links between strong domestic and international sectors;
create more opportunities for Australian seafarers; and
secure the maritime skills base necessary to provide regulatory and land based maritime services—as well as the sea based services.
1.52
Specifically, the minister’s discussion paper proposed a number of measures which were designed to address the issues identified during the House of Representatives committee's inquiry, and ‘reverse the decline in the Australian registered fleet’ and the pool of Australian maritime skills. The measures proposed included:
regulatory reforms to modernise the current legislation and provide a more robust regulatory framework for ships and shippers;
establishment of an Australian international register to support Australian shipping in international trades;
taxation incentives to encourage investment in Australian ships and skills development; and
a coordinated approach to developing workforce capability across the whole of industry (to build and maintain a maritime skills base into the future).
Consultation
1.53
The Gillard Labor Government—through the Department of Infrastructure and Transport—sought input from a broad cross-section of maritime and related industries and from the public. Submissions were received from industry, representative groups, research organisations, training organisations, unions and shipping operators. The minister's Industry Reference Groups were also involved in the development of the proposed regulatory, fiscal and workforce skills measured that were outlined in the minister’s discussion paper.
1.54
The Department of Infrastructure and Transport's regulation impact statement noted that the submissions received and the work of the Industry Reference Groups reflected broad support for the intent of the shipping policy reforms. Shippers argued that access to flexible, low cost shipping was important to their business (in a competitive world economy). It was also noted, however, that there was a lack of consistency regarding how reform could (or should) be achieved. The key themes which emerged during the consultation process were summarised as follows:
shippers support an efficient and internationally competitive domestic shipping industry, but have concerns that government intervention could increase freight rates and make some marginal trades uneconomic;
shippers expressed concern that restricting the use of Continuing Voyage Permits and Single Voyage Permits could lead to different modal choices;
stakeholders may have different views on productivity gains, but there is general agreement on the range of fiscal and regulatory measures required;
there is broad support for an optional tonnage tax, withdrawal of royalty withholding tax, accelerated depreciation, concessional seafarer taxation and changes to the cabotage regime (with a view to an increased Australian presence in the coastal trade;
there is broad support for the development of a second shipping register (because it would enable Australian shipping to compete for effectively in the international sphere);
there is a willingness on the part of industry and unions to develop a 'compact' that will underpin the proposed reforms; and
the new regulatory regime needs to consider the operational flexibility that shipping and shippers indicate exists in the current regulatory framework.
1.55
In 2012, the Gillard Labor Government introduced a package of legislation which included various tax incentives and measures designed to increase the competitiveness of Australian ships and provide them with advantages over foreign ships, in terms of operational and scheduling flexibility. The new legislation included:
the Coastal Trading (Revitalising Australian Shipping) Bill 2012;
the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012;
the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012;
the Shipping Reform (Tax Incentives) Bill 2012; and
the Tax Laws Amendment (Shipping Reform) Bill 2012.
1.56
The key reforms introduced in the new legislation included:
tax measures to remove barriers to investment in shipping and to foster the global competitiveness of the shipping industry—including the Seafarers offset (which provided a tax subsidy via the tax system for ships employing Australian crews);
the establishment of the Australian International Shipping Register (AISR) to encourage Australian companies to participate in the international shipping trade;
a new regulatory framework (including a three-level licensing regime for coastal trading); and
the establishment of a Maritime Workforce Development Forum to progress key maritime skills and training priorities.
1.57
When it commenced in 2012, the Coastal Trading (Revitalising Australian Shipping) Act 2012 (CT Act) replaced the single and continuing voyage permit system with a three‑tiered licence system. The updated system provided Australian-flagged ships with unlimited access to the coastal trade, while permitting foreign-flagged ships to operate under temporary licences for up to 12 months.
1.58
Two further bills, the Shipping Legislation Amendment Bill 2015 (2015 Bill) and the Coastal Trading (Revitalising Australian Shipping) Amendment Bill 2017 (2017 Bill), were subsequently introduced to reform the regulatory structure of the shipping industry. The 2015 Bill was subsequently negatived in the Senate and the 2017 Bill lapsed at the end of the 45th Parliament; hence, neither came in to force.
1.59
The Senate Rural and Regional Affairs and Transport Legislation Committee (the legislation committee) undertook inquiries into the provisions of both of these bills, and these inquiries are discussed in further detail in the following section.
Senate Rural and Regional Affairs and Transport Committees' inquiries
1.60
The committee has, over many years, maintained a strong interest in Australia's shipping industry. The ongoing themes, and issues of concern, stakeholders have raised with the committee over the years include Australia's maritime capability, coastal trading policy and legislation, the use of 'flag of convenience' shipping, the maritime workforce, maritime security, and the creation of a strategic fleet and a maritime cluster.
1.61
The legislation committee has undertaken a number of inquiries in relation to shipping and maritime legislation. As noted above, in recent years these have included inquiries into the provisions of the 2015 Bill and the 2017 Bill. Further, the committee also inquired into the increasing use of so-called flag of convenience shipping in Australia. These inquiries are briefly discussed below.
Shipping Legislation Amendment Bill 2015
1.62
In 2015, after consultation with industry, the Turnbull Coalition Government introduced the Shipping Legislation Amendment Bill 2015 in an attempt to reform the coastal shipping sector. Amongst other things, the bill proposed to amend the CT Act by creating a single permit system and removing the competitive process and the three-tier licensing system. On 25 June 2015, the Senate referred the provisions of the bill to the legislation committee for inquiry and report by 12 October 2015.
1.63
In its final report, the legislation committee highlighted the failure of the existing CT Act, stating that it had ‘failed to revitalise coastal shipping – indeed it seems, perversely, to have facilitated its continuing decline, making it often more economic to import goods than to ship them locally’. It concluded that the bill was a response to this failure and would benefit the economy generally by removing impediments, leveraging strengths, and reducing costs. Further, it would likely give Australian producers access to cheaper, more flexible, and more responsive options for transport.
1.64
Although the legislation committee recommended the bill be passed, it was subsequently negatived in the Senate and did not come in to force.
Coastal Trading (Revitalising Australian Shipping) Amendment Bill 2017
1.65
In 2017, the Turnbull Coalition government introduced the Coastal Trading (Revitalising Australian Shipping) Amendment Bill 2017. The bill sought to amend the CT Act to simplify coastal trading regulation, reduce administrative imposts, expand coverage, and provide clarity on a number of technical matters. On 19 October 2017, the Senate referred the provisions of the bill to the legislation committee for inquiry and report by 4 December 2017.
1.66
In its final report, the legislation committee stated that, although the bill did not propose substantial changes to the existing coastal trading regime, it believed the bill would ‘reduce red tape and simplify the administration of the coastal trading regime’. The committee also noted that the changes would result in decreased costs and reduced administrative burdens for both the government and industry.
1.67
Although the legislation committee recommended the bill be passed, it subsequently lapsed at the end of the 45th Parliament and did not come in to force.
Increasing use of so-called Flag of Convenience shipping in Australia
1.68
On 18 June 2015 the Senate referred the followed matters to the committee for inquiry:
The increasing use of so-called Flag of Convenience shipping in Australia, with particular reference to:
(a) the effect on Australia's national security, fuel security, minimum
employment law standards and our marine environment;
(b) the general standard of Flag of Convenience vessels trading to, from and around Australian ports, and methods of inspection of these vessels to ensure that they are seaworthy and meet required standards;
(c) the employment and possible exposure to exploitation and corruption of international seafarers on Flag of Convenience ships;
(d) discrepancies between legal remedies available to international seafarers in state and territory jurisdictions, opportunities for harmonisation, and the quality of shore-based welfare for seafarers working in Australian waters;
(e) progress made in this area since the 1992 House of Representatives Standing Committee on Transport, Communications and Infrastructure report Ships of shame: inquiry into ship safety; and
(f) any related matters.
1.69
Flag of convenience (FOC) shipping refers to those vessels that travel internationally, but are not registered to the state it is most closely associated with. Regardless of where a ship may be operating, the national registration determines the applicable laws governing all the activities on the ship.
1.70
FOC registration is most commonly used as a means of reducing or minimising operating costs and other financial imposts, including:
reducing the tax burden for ship owners;
making the vessel subject to less stringent labour legislation, thereby reducing wages and the financial burden of enforcing higher working conditions and safety standards;
minimising currency exchange and investment controls that ship owners are subject to; and
avoiding costs from meeting more stringent safety or inspection regimes for vessels.
1.71
As highlighted by the committee, it is often argued that FOC registration is used by shipping owners to maintain anonymity, and avoid the employment, tax and environmental requirements and restrictions in place at what would normally be considered the ship's country of origin.
1.72
In the committee’s final report, it made a number of recommendations. Specifically, the committee recommended:
the Fair Work Ombudsman implement a program of inspection for ships with foreign seafarers, to verify that the wages paid on board accord with Australian legal requirements;
the Australian government provide adequate funding to the Fair Work Ombudsman to implement an inspection program of ships with foreign crews, to assess the payment of wages;
the Australian government implement clear guidelines and procedures to direct authorities on how to respond to deaths that occur on shipping vessels travelling in or to Australian waters, including how to engage with a vessel's flag state in a timely manner to progress appropriate investigations;
the Australian government consider any possible amendments to legislation governing federal investigative authorities, to provide clarity on jurisdictional responsibility for investigating deaths at sea, when they occur on shipping vessels travelling in Australian waters. The Australian government should progress jurisdictional issues with the states and the Northern Territory at COAG to ensure satisfactory outcomes;
the re-establishment of the Maritime Workforce Development Forum, or a similar advisory body. The advisory group would comprise a variety of key maritime industry stakeholders and provide advice to government on new Australian shipping policies and workforce development and training opportunities;
the Australian government undertake a focussed and targeted review of the Australian maritime industry, with a view to growing and supporting the Australian maritime industry and developing policies that appropriately manage the operation of flag of convenience vessels in Australian waters; and
the Australian government undertake a comprehensive whole-of-government review into the potential economic, security and environmental risks presented by flag of convenience vessels and foreign crews.