Bills Digest no. 53 2015–16
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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Anne Holmes, Economics Section
Jaan Murphy, Law and Bills Digest Section
23 November 2015
Contents
The
Bills Digest at a glance
Purpose of the Bill
Background
Committee consideration
Parliamentary Joint Committee on Human Rights
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions: Schedule 1
Other provisions
Concluding comments
Appendix A: international comparison of selected
jurisdictions
Date introduced: 25
June 2015
House: House of
Representatives
Portfolio: Infrastructure
and Regional Development
Commencement: A day
to be fixed by Proclamation, or six months after Royal Assent.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
What the Bill does
This Bill will:
- open
the Australian coastal shipping market to increased foreign competition
- increase
flexibility in the coastal shipping sector
- seek
to reduce the cost of coastal shipping
- extend
regulation to cruise ships, transhipment vessels supporting the operation of
offshore facilities (and those transporting liquid fuel products from them to
Australia) and certain other activities and
- provide
a limited form of protection to domestic shippers against foreign competition
in the form of a degree of competitive neutrality (at least in regards to wage
costs).
How the Bill works
To achieve the above the Bill:
- replaces
the existing three-tiered licensing system with a single permit regime open to
both foreign and domestic vessels
- removes
the minimum five-voyage requirement currently imposed on foreign vessels
seeking to engage in coastal shipping in Australian waters
- abolishes
the ‘notice and response’ system
- allows
both foreign vessels and those on the Australian International Shipping
Register to more readily engage in coastal shipping between international
voyages and
- provides
that Australian wages must only be paid to foreign seafarers on vessels engaged
in coastal shipping for more than 183 days each year. Currently most foreign
vessels are required to pay Australian wages for the entire time they are
engaged in coastal shipping.
Why the Bill has been introduced
-
The Bill has been introduced to give effect to the policy
intention of increasing the competiveness of the broader Australian economy by
reducing coastal shipping costs through increased foreign competition. This was
indirectly flagged in a number of policy documents produced by the Coalition prior
to the last election.
- The
Government argues that Bill builds on submissions received during the options
paper and consultation process conducted by the Department of Infrastructure
and Transport.
The purpose of the Shipping Legislation Amendment Bill
2015 (the Bill) is to amend the Coastal Trading (Revitalising Australian
Shipping) Act 2012 (the Act)[1]
and other legislation relating to shipping to:
- replace
the existing system of three levels of licences for coastal shipping with a
single permit
- allow
vessels to be registered on the Australian International Shipping Register
(AISR) if they undertake 90 days international trading a year (instead of the
current requirement to be ‘predominantly engaged’ in international trade) and
allow these vessels to engage in coastal shipping and
- alter
the workplace relations environment so that:
-
only
seafarers on vessels engaged in coastal shipping for six months or more are
covered by the Fair Work Act 2009 (the FWA) and
- making
a collective agreement with workers is no longer a condition for being
registered on the AISR.
International context
At a general level, it could be said that three basic
‘models’ of coastal shipping exist around the world: closed, partially open and
fully open. A ‘closed’ coastal shipping regime is one that is either entirely
or predominately closed to foreign ships. A partially open system (such as Australia’s
previous and current systems) is open to foreign shipping, to a degree, but
protections or incentives for domestic ships exist. A fully open system is one
where both domestic and foreign ships have equal (or nearly equal) access to
coastal shipping and are regulated in an identical (or nearly identical) way.
The table below summarises the coastal shipping policies of a number of other
countries.[2]
Table 1: cabotage arrangements of selected jurisdictions
Country
|
Type of regime
|
Policy measures
|
Policy objective
|
Canada[3]
|
Closed
|
Access to coastal trade and short sea shipping restricted
to Canadian ships unless none are available, in which case foreign ships may
be used under waiver.
|
Provide a protected environment in which Canadian short
sea shipping can prosper without being exposed to full force of international
competition.
|
European Union[4]
|
Partially open
|
Maritime transport services within a member state (that
is, purely national connections) can be offered by companies of other member
states. Some member states restrict access to flags of EU members while
others don’t.
|
Liberalisation between EU members while supporting the
policies of EU member states to support their own shipping industries.
Increase opportunity to access EU cargo while maintaining some restrictions
to EU flags.
|
United States[5]
|
Closed
|
Highly restrictive. Coastal trade restricted to US built,
US owned, US crewed and US flagged ships. Waivers may be granted but only in
the interest of national defence.
|
Promotion and maintenance of the US merchant marine
industry to protect national and economic security of country.
|
New Zealand[6]
|
Partially open
|
Access to coastal trade restricted to NZ ships and foreign
ships that pass NZ as part of an international voyage. Minister may authorise
another ship on terms the minister thinks appropriate.
|
Part of a move toward liberalisation of a range of public
policy areas in the 1990’s. There were calls to reintroduce tighter
regulation after the Rena oil-spill incident to ensure appropriate
safety and environmental protection.
|
Japan[7]
|
Partially open
|
Access to coastal shipping of cargo or passengers
restricted to Japanese ships, with the exception of vessels from a limited
number of other countries which have been granted access pursuant to treaties
or which have obtained a permit.
|
National security, the reliable transport of everyday
goods for local residents and the secure employment of domestic crew members.
|
China[8]
|
Closed
|
Foreign vessels not permitted to engage in coastal
shipping.
|
Protecting China’s economic interests and ensuring its
sovereignty and safety.
|
Source: as per sources cited in the footnotes in the table
above.
The countries listed in the table above are examined in
detail in Appendix A: international comparison of selected jurisdictions.However, the key point to emerge from the table above is that many of our major
trading partners and other countries have either closed or partially open
coastal shipping regimes in place. If the Bill is passed, Australia’s coastal
shipping regime would either be classified as partially open, or fully open,
depending on the actual impact of the 183 day rule on the degree of foreign competition
entering the Australian coastal shipping market. With the above comparisons in
mind, the reforms made in 2012 to Australia’s coastal
shipping regime are examined, to give further context to the changes proposed
by the Bill.
2012 reforms to coastal shipping in
Australia
The current Bill, like previous reforms, is purportedly aimed
at developing a competitive Australian shipping industry.[9]
In doing so, it is necessary to balance the interests of shipowners, the
maritime workforce, and the shippers who depend on them. Shipping is both an
important industry in itself and an input to many other industries.
Despite the introduction of the Act, the number of
Australian flagged trading vessels, the proportion of Australia’s international
trade carried on Australian flagged vessels, and the number of persons employed
in coastal shipping have fallen in recent years. In addition, the average age
of the Australian trading fleet is considerably greater than the global
average.[10]
These falls occurred whilst globally sea freight was expanding.
The previous Labor Government passed a package of
legislation in 2012 designed to respond to the long term decline in the number
of Australian flagged trading vessels by providing various tax incentives and
introducing measures (such as the ‘notice in response’ system, discussed below).
Those measures were designed to increase the competitiveness of Australian
ships and to provide them, in effect, with comparative advantages over foreign
ships (at least in terms of operational and scheduling flexibility). Using the
classification system noted above, Australia’s coastal shipping regime would be
classified as partially open, tending towards closed (depending on how
significant a barrier to foreign competition the ‘notice in response’ system
represents). Useful background to the changes is in the Bills digests for the Bills
in the 2012 package.[11]
However, briefly, the key reforms introduced by the Act included tax measures to
remove barriers to investment in Australian shipping and to foster the global
competitiveness of the shipping industry such as the Seafarers offset (in
effect, a wage subsidy via the tax system for ships employing Australian crews;
a provision to abolish that offset is in a Bill which is before the Senate)[12]
and other initiatives such as:
- the
establishment of a new shipping Registrar (the 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 (outlined below) and
- the
establishment of a Maritime Workforce Development Forum to progress key
maritime skills and training priorities.[13]
In his second reading speech on the 2012 package, the then
Minister for Infrastructure and Transport, Mr Albanese, confirmed that
seafarers working on vessels engaged in coastal shipping would continue to be
covered by the FWA.[14]
At that time the Coalition expressed concern that the tax
incentives would encourage other industries to seek government assistance and
subsidies and would lessen competitive pressures towards efficiency and that
the licensing regime for foreign vessels would reduce competition and increase
shipping costs.[15]
The main provisions of the Act took effect from 1 July 2012.[16]
Government policy commitment
Whilst not directly addressed in its 2013 election
campaign materials, the Coalition indirectly flagged an intention to increase
foreign competition in Australian coastal shipping in a number of policy
documents. For example, the Nationals indicated they would:
- allow
Australian shipping to compete effectively against other transport modes and
internationally
- review
Labor's recent shipping reforms with a view to revising or reversing measures
that hinder the competitiveness of Australia's shipping services and
- repeal
the five voyage minimum for voyage permits (discussed below).[17]
The Coalition’s policy document ‘Discussion Paper on
Building a Strong, Prosperous Tasmania’, whilst focusing on shipping costs to
and from Tasmania, noted that ‘fundamental, downward pressure on the cost of
doing business in Tasmania will occur if greater competition occurs in the
shipping and transport sectors’.[18]
Arguably this could be said to be an indication of a broader commitment to
introduce greater (foreign) competition into coastal shipping around Australia,
including Tasmania.
Options paper and consultation process
In line with the above policy commitment to review the
reforms to coastal shipping introduced by the Act, in April 2014 the Government
released an options paper on regulating coastal shipping.[19]
The paper conceded that there was no data available for the period since the
reforms took effect.[20]
It declared that:
... the current regulatory regime comes at a cost to shippers,
and, ultimately, their customers. Industry specific assistance imposes costs on
taxpayers ... Regulation dulls the incentive for firms to improve productivity,
cease unsuccessful investments early and diversify into other ventures.[21]
Through the options paper process the Government sought
the views of stakeholders about the ‘current operation of the Australian
shipping industry’ and in particular, the operation of the Act.[22]
As part of this consultation process, the Department of Infrastructure and Regional
Development (Department) sought submissions ‘from as broad a range of
stakeholders as possible’.[23]
However, the consultation paper also noted that:
The Government will consider the outcomes of this consultation
together with the Productivity Commission’s recommendations from its inquiry
into Tasmanian Shipping and Freight and the Government’s ‘Root and Branch’
review of competition policy.[24]
The relevant outcomes of the Productivity Commission’s
review of competition laws (the Harper review) are briefly disused below. In
terms of models for reform, the options paper canvassed three options. However,
the measures included in the Bill reflect a fourth option, which, according to
the Regulatory Impact Statement (contained in the Explanatory Memorandum to the
Bill):
...was developed in light of the outcomes of the consultative
process and better reflected industry views about the advantages of an option
that captured most of the benefits of full deregulation but with additional
protections for wages and conditions for workers onboard ships trading in
Australia for most of the year... The additional option (option 4) is similar to
the controlled deregulation option but would require the employment of people
with Australian work rights in some circumstances, and the application of the
Fair Work Act to foreign ships engaged predominantly in coastal trade.[25]
Harper review recommendations
The Harper review made two key recommendations in relation
to coastal shipping:
- that
Part X of the Competition and Consumer Act 2010 (the CCA),[26]
which allows certain types of shipping operators to enter cartel agreements among
themselves in relation to the freight rates, the quantity and kinds of cargo to
be carried on particular trade routes, be removed and
- other
restrictions on coastal shipping should be removed, unless ‘it can be
demonstrated that the benefits of the restrictions to the community as a whole
outweigh the costs, and the objectives of the government policy can only be
achieved by restricting competition’.[27]
The Bill only deals with the second recommendation noted
above, namely whether the removal of restrictions on foreign vessels engaging
in coastal shipping will, on balance, benefit the community and Australian
economy as a whole. The Government argues that the proposed changes will do so.[28]
It does not propose to make any of the recommended changes to the CCA
noted above.
Senate Rural and
Regional Affairs and Transport Legislation Committee
The Bill was referred to the Senate Rural
and Regional Affairs and Transport Legislation Committee (Transport Committee) for
inquiry and report. Details of the inquiry are at the
inquiry’s web page.[29]
The Transport Committee received 40 submissions. The views of stakeholders are
addressed under the heading ‘Position of major interest groups’, whilst
the views of non-government parties and independents are addressed under the
heading ‘Policy position of non-government parties/independents’ below.
Briefly however, the main issues identified by the Transport Committee
included:
- the
‘somewhat inconsistent’ objectives of the current Act
- the
need for competition in Australian coastal shipping and the role to be played
by foreign vessels
- the
application of Australian wages to foreign seafarers
- loss
of employment and employment related skills in Australia and
- the
application of the Bill to cruise ships
The majority report of the Transport Committee noted that
the Act represented a ‘clearly inadequate’ attempt to revitalise coastal
shipping.[30]
The majority of the Transport Committee recommended that the Bill be passed,
but that the Government give consideration to:
- the
desirability of providing a mechanism for emergency permit applications and
- clarifying
the effect of the Bill on cruise ship operators.[31]
Both the ALP and Greens members of the Transport Committee
issued dissenting reports, opposing the Bill in its entirety.[32]
Senate Standing Committee for the
Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills had no
comment on the Bill.[33]
The Parliamentary Joint Committee on Human Rights (PJCHR)
reported on the Bill in September 2015.[34]
The PJCHR noted that the 183 day rule measure (discussed below under the
heading ‘183 day rule and foreign vessels’) engaged and ‘may limit the
right to just and favourable conditions at work’ under the International
Covenant on Economic, Social and Cultural Rights (ICESCR).[35]
This is because the 183 day rule ‘may permit individuals to be paid less than Australian
award wages whilst working in Australian coastal waters’.[36]
The PJCHR noted that under article 2(1) of the ICESCR,
Australia has obligations in relation to the right to work including:
- the
immediate obligation to satisfy certain minimum aspects of the right
- the
obligation not to unjustifiably take any backwards steps (retrogressive
measures) that might affect the right
- the
obligation to ensure the right is made available in a non-discriminatory way and
- the
obligation to take reasonable measures within its available resources to
progressively secure broader enjoyment of the right.[37]
Whilst the rights provided by the ICESCR are not absolute,
the PJCHR noted that the right to work may only be subject to limitations that
are determined by law, compatible with the nature of the right and solely for
the purpose of promoting the general welfare in a democratic society.[38]
The PJCHR noted:
The statement of compatibility states that Australia is not
required to set wages and conditions for seafarers on foreign vessels under the
ICESCR. This appears to misunderstand the nature of Australia's obligations
under international law. Australia is obligated to apply international human
rights law to everyone subject to its jurisdiction. This includes people in
Australian coastal waters that form part of Australia's territory. As part
of Australia's sovereignty, Australia applies a number of domestic laws to
foreign flagged vessels in its coastal waters including the Navigation Act
2012.
Accordingly, to the extent that the Bill may expand the
number of individuals working in Australian coastal waters on below Australian
award wages, the Bill may limit the right to just and favourable conditions of
work.[39]
(emphasis added).
The PJCHR concluded that the 183 day rule ‘raises
questions as to whether the measure limits the right, and if so, whether that
limitation is justifiable’.[40]
It therefore concluded that ‘the measure engages and may limit the right to
just and favourable conditions at work as the Bill may permit individuals to be
paid less than Australian award wages whilst working in Australian coastal
waters’ and stated that ‘the statement of compatibility does not sufficiently
justify that limitation for the purposes of international human rights law’.[41]
As a result, the PJCHR requested advice from the Minster regarding whether:
- there
is reasoning or evidence that establishes that the stated objective addresses a
pressing or substantial concern or whether the proposed changes are otherwise
aimed at achieving a legitimate objective
- there
is a rational connection between the limitation and that objective and
- the
limitation is a reasonable and proportionate measure for the achievement of
that objective.[42]
In relation to whether the 183 day rule (argued to limit
the right to just and favourable conditions at work) is designed solely for the
purpose of promoting the general welfare in a democratic society, one possible
argument is that the measure in question will, on balance, benefit the
community and Australian economy as a whole, and therefore is a compatible
limitation on the right.[43]
The Shadow Minister for Infrastructure and Transport, Mr
Albanese, speaking on a separate motion about the claimed ‘detrimental effects’
of the 2012 package in December 2014, noted that the 2012 policy package had
been developed in consultation with industry.[44]
He referred to the Government’s proposed provision that the FWA and the Seagoing
Industry Award 2010[45]
(Award) would only apply to vessels which spend six months in Australian waters
as ‘Work Choices on water’.[46]
In addition to his comment in Parliament, Mr Albanese has also noted that major
incidents around the coast have mostly involved foreign vessels, and questioned
the security implications of allowing the Australian flagged fleet to
disappear.[47]
Further, Mr Albanese has also described allowing foreign vessels access to the
coastal trade as ‘unilateral economic disarmament’ and pointed out that most
countries have some form of cabotage.[48]
He has also said that the legislation:
... would destroy the Australian shipping
industry by removing current provisions that require people moving freight
between Australian ports to first seek out an Australian vessel or where one is
not available, engage a foreign‑flagged vessel on the condition they pay
the crew Australian-level wages.[49]
Independent member Mr Andrew Wilkie described the
projected measures as an attack on workers and a distraction from the real
issue for Tasmania, which was the cost of getting Tasmanian goods to Melbourne.[50]
Eighty-seven submissions were made in response to the 2014
options paper, and they are available
on the Department’s web page.[51]
The Transport Committee received 40 submissions. What follows is an attempt to
summarise the range of views expressed by stakeholders in both the options
paper consultation process and the Transport Committee’s Inquiry.
Industry participants and industry
representative bodies
The Australian Peak Shippers Association submitted that
the system of permits had resulted in a deterioration in services available and
an increase in costs. It suggested that this could drive manufacturing
offshore.[52]
This was echoed by several individual companies, and by the National Farmers’
Federation.[53]
The Australian Food and Grocery Council and the Minerals Council of Australia favoured
complete deregulation of access to coastal trading.[54]
The Danish Maersk Line argued that the regulatory regime
was preventing it from offering a viable service. It specified the extra cost
involved in paying Australian wages, and the administrative burden: it
estimated that it required ‘one full head count’ to manage compliance, and said
that the system did not allow for one-off voyages.[55]
CSL Australia, which describes itself as a key player in the coastal market
with long term arrangements with Australian shippers, did not believe that
costs were increased by the 2012 package, except for the requirement to pay
Australian wages. CSL Australia argued that dedicated Australian-flagged coastal
vessels could not compete with foreign vessels entering and leaving Australian
waters after engaging in coastal shipping.[56]
CSL Australia recommended that ‘a change is required to the new Bill to achieve
a level playing field’, and nominated increasing the number of days a foreign
vessel must engage in coastal shipping in Australian water prior to being
required to pay Australian wages ‘be increased from 183 to 295 days’.[57]
The Freight and Logistics Council of WA recommended a more
flexible temporary licence, which would require only that the crew were paid ‘internationally
acceptable’ wages (as defined by the International Transport Federation) and
would not require a particular frequency or presence, as well as the general
licence.[58]
North Star Cruises, an Australian passenger cruise
company, complained that it was undercut by foreign operators, who did not have
to pay Australian wages. Meanwhile the tax incentives were not available to it
because it did not operate internationally. It supported the current
regulations, with further restrictions.[59]
This was also the response of Coral Princess Cruises,[60]
while the industry association, the Australian Expedition Cruise Shipping
Association, argued that all foreign cruise vessels should be required to be on
the General Register.[61]
On the other hand the South Australian Tourism Commission favoured broadening
the exemptions for foreign cruise ships to increase the amount of tourism
activity along the coast.[62]
Training providers
The Australian Maritime College expressed concern that the
options paper had not considered the training needs of the industry, for both seafaring
and shore-based roles, which were essential for the industry to survive.[63]
Trade unions
The Maritime Union of Australia (MUA), Australian Maritime
Officers Union (AMOU) and the Australian Institute of Marine and Power
Engineers (AIMPE) all oppose the Bill.[64]
The MUA opposed the Bill on the grounds that it would
‘destroy the Australian shipping industry’ by removing ‘all preferential
treatment for Australian ships, which has been at the heart of maritime and
shipping policy in Australia for over a century’.[65]
The AMOU opposed the Bill on the ground that it would ‘lead to the loss of jobs
for Australian deck officers’.[66]
The AIMPE opposed the Bill on a number of grounds, including that:
- the
impact of the Bill would be adverse for the few remaining Australian companies
engaged in the shipping sector
- the
Bill would reduce employment opportunities for Australian Marine Engineer
Officers, Deck Officers and other Australian seafarers
- as
foreign shipping operators are ‘effectively free from the payment of corporate
income tax’, allowing foreign competition in the coastal shipping sector would disadvantage
Australian shippers and
- the
‘Australian’ crew requirements could be easily avoided.[67]
According to the Explanatory Memorandum, the Bill has no
financial implications for the Commonwealth.[68]
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[69]
However, as noted earlier, the PJCHR has raised concerns
about the 183 day rule and its compatibility with the right to just and
favourable conditions at work.
Title of the Act
Items 1 and 2 of Schedule 1 of the
Bill will amend the title of the Act to the ‘Coastal Shipping Act 2015’.[70]
Object of the Act
The Transport Committed noted that ‘it was not clear whether
the Act was attempting to benefit Australian ships or Australian industry’ and
further noted that this ‘lack of clarity had led to a significant amount of
litigation by a number of companies’.[71]
An example of the litigation referred to by the Transport Committee is CSL
Australia Pty Limited v Minister for Infrastructure and Transport (the CSL Case, discussed
below), which highlighted the important role that the interpretation of an
Act’s object clause can play in determining disputes over the issuing (or
refusing to issue) licences or permits under the Act.[72]
The Bill makes some improvements in this regard. Proposed section 3 seeks
to significantly simplify the objects section of the Act in a manner that
appears to address what the Transport Committee called the ‘somewhat
inconsistent’ objectives of benefiting both Australian ships and Australian
industry more broadly by emphasising the needs of industries that rely on
coastal shipping over the needs of the shippers.[73]
Proposed section 3 provides that the object of the Act is to provide a
regulatory framework for coastal shipping in Australia that:
- fosters
a competitive coastal shipping services industry that supports the
Australian economy and
- maximises
the use of available shipping capacity on the Australian coast. (emphasis
added)
Expanding the range of vessels and
activities regulated
The Bill proposes to expand the range of vessels and
activities regulated by the Act. Currently section 7 of the Act, subject to
certain exceptions, defines coastal trading as where a vessel (in
connection with a commercial activity):
- takes
on board passengers or cargo at a port in a state or territory
- carries
those passengers or that cargo to a port in a different state or territory[74]
and
- where
some or all of the passengers disembark or some or all of the cargo is then unloaded.[75]
The Act applies to vessels that engage in ‘coastal
trading’ in Australian waters.[76]
The Bill will replace the concept of coastal trading with ‘coastal shipping’.[77]
The practical effect of the proposed changes is that the range of activities
captured by Australia's coastal shipping regime would be expanded to include
cruise ships, transhipment vessels supporting the operation of offshore
facilities (and those transporting liquid fuel products from them to Australia)
and certain other activities, as discussed below.
Extension to transportation of liquid fuel products from offshore
facilities
Proposed paragraph 7(1)(d) will extend the scope of
coastal shipping beyond the activities currently covered in the definition of
coastal trading noted above to include the transportation of liquid fuel
products from offshore facilities to a port in a state or territory.
Extension to certain activities
Proposed paragraph 7(1)(e) and proposed section
7A (at item 27 of Schedule 1 to the Bill) will extend the
application of the Act to periods of time that a vessel is loading or unloading
cargo (even if it does not move from port to port) and days that the vessel is
docked for service.[78]
Extension to cruise ships
The Bill will also bring cruise ships into the coastal
shipping regulatory system and hence such vessels will require a coastal
shipping permit. This is a significant change, as currently most cruise ships
are exempt from the Act’s licensing regime.[79]
This change attracted some criticism.[80]
Proposed permit period
inappropriate for the cruise industry
For example, it was suggested that the proposed 12 month
permit period was inappropriate for the cruise industry, given that cruise
programs are generally published and available for purchase two years in
advance.[81]
As a result, it was suggested that cruise ship operators be able either to
obtain a longer term permit or, alternatively, that they be issued with a
rolling permit that remained valid until it was breached.[82]
Dry dock arrangements
The proposed dry dock arrangements were also criticised. The
Transport committee noted that the cruise ship industry proposed that the Customs
Act 1901 should be amended to ensure that cruise ships entering dry dock in
Australia are not deemed to be imported, and hence remove the need for dry
docking and importation to be part of the permit system. It was argued that
this would allow cruise ship operators to maximise their coastal shipping activity
within the 183 day threshold, instead of having the days a vessel is in dry
dock (and hence not engaged in normal operations) counted towards the days it
was engaged in coastal shipping.[83]
Smaller ‘adventure’ cruise ships
The Transport Committee noted that ‘expedition’ cruise
ships generally fell below the exemption threshold that currently applies to
larger cruise ships, and that some submissions had argued that the benefit of
the exemption (i.e., vessels of a certain size would not require a permit)
should be extended to smaller cruise ships.[84]
Background to the proposed new coastal
shipping permit system
The central feature of the Bill is the proposed permit
system that will allow foreign vessels to engage in coastal shipping in
Australian waters for up to 12 months (with no minimum number of voyages) and
the abolition of the ‘notice in response’ system. To give context to the
proposed changes, the previous regulatory regimes are briefly summarised below,
and comparisons to major trading partners are considered.
Navigation Act 1912 regime
Under the previous regulatory regime created by Part VI of
the Navigation Act 1912, which operated in various reiterations for
almost a century, vessels were required to hold either a licence, single voyage
permit or a continuing voyage permit to engage in coastal trading. The Navigation
Act created two regulatory categories:
- Australian-flagged
ships could operate under a permanent and unrestricted licence to carry cargo
and passengers (subject to various conditions including labour law requirements)
and
- foreign
ships which could operate (when the Minister was satisfied that no adequate Australian
ship was available) under either:
- a
single voyage permit (SVP): as the name suggests, this allowed a single voyage
between specified ports carrying a specified type of cargo or passengers to be
carried out or
- a
continuing voyage permit (CVP): a temporary permit to carry specified cargo for
a period of time determined by the Minister between specified ports.[85]
The framework created by the Navigation Act provided
that ships issued with an unrestricted licence were required to pay Australian
wages.[86]
However, in circumstances where no licensed ship was available (or was not
adequate for a specific task) the Navigation Act provided that the
Minister could (if satisfied that it was in the public interest) issue one of the
two types of permits noted above to a non-licensed ship (generally foreign
owned and crewed).[87]
The Navigation Act provided that ships operating under either
type of permit were not engaged in coastal trading, and hence not required to
pay Australian wages to the crew.[88]
As a result, the Navigation Act (and labour laws in force at that time) had
the combined effect of facilitating a significant, but not dominant, role for
foreign flagged ships in Australia's coastal shipping market, due (in part) to
lower wage costs (crew wage cost and its impact on competitiveness is a key
issue discussed elsewhere in this digest), whilst the restrictions on foreign
vessels provided a degree of protection to the Australian shipping industry.
The Fair Work Act 2009
The commencement of the FWA ended the different wage
treatment between foreign seafarers and Australian seafarers engaged in coastal
trading. Under the FWA and the Fair Work Regulations 2009, all vessels engaged
in coastal trading in Australia were required to pay Australian award rate
wages to their crew.[89]
However, subsequent amendments to the FWA Regulations partially wound back that
change.[90]
Current regime
The Act introduced the current regime. It replaced the
relatively simple system of licences and permits available under the Navigation
Act with a new three-tier licensing regime that required coastal trading
vessels to hold either a:
- general
licence
- temporary
licence or
- an
emergency licence.[91]
These are discussed below.
General licences
Currently, a general licence is available to Australian
flagged vessels that are registered on the Australian General Shipping Register
(AGSR).[92]
Certain foreign registered vessels that intend to transition onto the AGSR are eligible
for a transitional general licence, which affords the vessel the same rights as
a general licence.[93]
Vessels with a general licence must:
- employ
Australian residents
- pay
crew wages at the rates specified in Part A of the Award and
- comply
with annual mandatory reporting requirements (concerning matters such as the type
of cargo carried and the ports at which cargo is loaded and unloaded).[94]
A general licence provides unrestricted access to coastal
trading for a period of up to five years.[95]
Temporary licences
Currently, temporary licences are available to foreign-flagged
vessels as well as those on the Australian International Shipping Register
(AISR).[96]
Vessels with a temporary licence are able to engage in coastal trading, subject
to time, cargo, passenger or other voyage conditions for up to 12 months.[97]
Vessels with a temporary licence can use foreign crew, but must comply with certain
Australian employment conditions (for example, paying crew wages at the rates
specified in Part B of the Award).[98]
However, obtaining a temporary licence requires nominating
specific information (such as loading dates, cargo types, volumes, and ports of
loading and unloading) at the time an application for a temporary licence is
made.[99]
Further, as part of this process a temporary licence applicant must participate
in the ‘notice in response’ process (discussed below under the heading ‘The notice in response process’). This involves the publication of the
information mentioned above on the Department’s website, to allow general
licence holders the opportunity to nominate to carry the cargo instead (in line
with the requirements of the shipper).[100]
The Act imposes an obligation on temporary licence applicants to negotiate with
any general licence holder who might nominate to carry some or all of the cargo
published on the Department’s website, to determine who carries what.[101]
Where a temporary licence holder and general licence holder do not reach an
agreement, the Minister determines whether a temporary licence is to be granted,
its scope and any other conditions.[102]
Emergency licence
An emergency licence allows a vessel to engage in coastal
trading for no more than 30 days.[103]
It can be issued to vessels on the AGSR, AISR and foreign vessels.[104]
Emergency licences are intended to respond to national emergencies such as
cyclones, earthquakes and bushfires.[105]
Vessels with an emergency licence:
- can
hire foreign crew, but must comply with certain Australian employment
conditions[106]
and
- are
subject to mandatory reporting requirements before and at the end of any voyage
undertaken during the licence period.[107]
Under the current Act, in order for a foreign registered
vessel to obtain a temporary licence, all vessels holding a general licence
have the right to be notified of any ‘relevant voyage’ and to provide a ‘notice
of availability’ in relation to that voyage.[108]
The ‘notice in response’ process involves both the temporary
licence applicant and interested general licence holders who are interested in
carrying the cargo entering into negotiations. Where the mandated negotiations
fail, all parties must provide detailed submissions that are considered by the
Minister, who then determines whether to grant a temporary licence to the
relevant applicant. The ‘notice in response’ process, the factors (and their weighting)
that the Minister considered when making a decision to grant a temporary
licence were central to the dispute in the CSL Case. The current system
has been criticised for being inefficient and stifling competition in
Australian costal shipping.[109]
Summary of the previous, current
and proposed coastal shipping regimes
The table below provides a generalised summary of the
coastal shipping regimes under the Navigation Act, the Act and that
proposed by the Bill.
Table 2: Summary of Australian coastal shipping regimes
Navigation Act
|
Licence or permit
|
Activities allowed
|
Crew /wage conditions
|
Flag
|
Owner or operator
|
Permanent and unrestricted licence
|
Unrestricted ability to carry coastal cargoes and
passengers
|
Australian[110]
|
Australian
|
Australia
|
Single voyage permit
|
A single voyage to carry pre‑determined cargo or
passengers
|
Foreign[111]
|
Foreign
|
Foreign
|
Continuing voyage permit
|
Carrying specified cargo for a period of up to three
months between specified ports
|
Foreign[112]
|
Foreign
|
Foreign
|
Current regime
|
General licence
|
Unrestricted ability to carry coastal cargoes and
passengers
|
Australian (Part A of the Award)[113]
|
Australian
|
Australian
|
Temporary licence
|
Time, trade and/or voyage limited
|
Australian (Part B of the Award)[114]
|
Australian (AISR registered)
Foreign (all other cases)
|
Australian (AISR registered) or Foreign (all other cases)
|
Emergency licence
|
Limited to emergency situations.
|
Australian (Part A of the Award)[115]
|
Australian or Foreign
|
Australian or Foreign
|
Proposed regime
|
Licence or permit
|
Activities allowed
|
Crew /wage conditions
|
Flag
|
Owner or operator
|
Coastal shipping permit
|
Unrestricted ability to carry coastal cargoes and
passengers.
|
AGSR vessels: Australian (Part A of the Award)[116]
AISR vessels whilst operating in Australian waters: Australian
(Part A of the Award) and minimum Australian crew requirements[117]
Foreign vessels if engaged in costal shipping for:
- less
than 183 days: foreign wages[118]
- more
than 183 days: Australian (Part B of the Award) and minimum Australian
crew requirements[119]
|
Australian or Foreign
|
Australian or Foreign
|
Source: As per footnotes in the table above.
The arguments for opening up
coastal trading to foreign flagged vessels
As the table above demonstrates, neither the Act nor the
previous system under the Navigation Act entirely excluded
foreign-flagged ships from coastal shipping in Australian waters. Instead, the
Act and previous system under the Navigation Act favoured Australian
ships by providing them with a comparatively greater level of operational and
scheduling flexibility compared to foreign ships. However, the changes made by
the Act appear to have had a further effect of squeezing foreign-flagged ships
out of the market by increasing the regulatory burden they face, at least
compared to the previous regime under the Navigation Act.
It has been argued that the changes made by the Act have caused
transport costs to rise (although this is disputed[120]),
resulting in bulk commodities being sourced from cheaper overseas markets and
negatively impacting Australian commodity producers.[121]
As a result, the Bill emphasises the needs of the Australian economy as a whole
over the interest of Australian shippers by seeking to reduce the cost of
coastal shipping by opening the coastal shipping industry to increased foreign
competition.[122]
Provisions that will allow foreign
flagged vessels to engage in coastal trading
As proposed section 12A (at item 38 of
Schedule 1 to the Bill) prohibits vessels from engaging in coastal shipping without
a coastal shipping permit, any vessel – Australian or foreign– must obtain a
permit prior to engaging in coastal trading. From a practical
perspective, the proposed changes retain the current position that foreign vessels
engaged in international shipping (i.e. moving cargo or passengers to Australia
from another country) cannot choose to engage in coastal shipping between
international voyages without first obtaining a permit. However, the proposed
changes will introduce a greater degree of flexibility. This is because the
minimum five voyages currently imposed by paragraph 28(2)(a)—which requires a
significant amount of pre‑planning—is scrapped. Instead, under proposed
section 16 (at item 30 of Schedule 1 to the Bill) once approved, a
permit remains in force for 12 months, unless it is cancelled earlier. The
inclusion of a fixed 12‑month permit period has implications for foreign
vessels, as discussed below. Clearly however, the introduction of a fixed
permit period without any minimum voyage requirements simplifies the process of
engaging in coastal shipping between international voyages and therefore
introduces a degree of flexibility lacking from the current regime. This point
was made during the Transport Committee Inquiry into the Bill:
The overall purpose of the policy is to create a more
efficient and cost-effective industry at the same time as ensuring that we have
a growth in onshore jobs and offshore jobs in the maritime industry. The intention
of the policy for foreign flagged ships is to allow and encourage, in fact,
foreign flagged ships to duck in and out of Australia to do some of these
routes that Australian ships are not doing, to come in and do that. So when
the previous Labor government made its changes, it did make it more cumbersome
for foreign ships to duck in and out and do some trading on the Australian
coast, for its various policy reasons.[123]
(emphasis added)
Who can apply for a permit or apply
to transfer a permit?
Proposed Part 4, Division 1 of the Act (at item 30
of Schedule 1 to the Bill) deals with applying for, and granting coastal shipping
permits (permits), whilst proposed Division 3 of Part 4, deals with
applying to transfer permits. The provisions dealing with applying for and
transferring a permit are very similar. To aid the reader only the provisions
dealing with applying for a permit are examined below, with the equivalent
provisions relating to transfer of permits noted in the footnotes (however any
substantive differences are examined in the main text).
Proposed subsection 13(1) provides that a person who
has a legal or beneficial interest in a vessel (other than a mortgage) or who
has day-to-day responsibility for the management a vessel may apply for a
coastal shipping permit for a vessel, provided it is registered:
- on
the AGSR
- on
the AISR, or
- under
the law of a foreign country.[124]
The effect of proposed subsection 13(1) is to open up
coastal shipping not only to Australian vessels, but also to foreign vessels to
a much greater extent than previously possible under either the Act or the Navigation
Act. In addition, amendments to the Shipping Registration Act 1981 (the
Registration Act) will allow ships on the AISR to apply for coastal
shipping permits and engage in coastal shipping to a much greater degree than
possible under the Act. In turn, this would increase the uses to which vessels on
the AISR can be put, and thus will enhance the flexibility of the Australian
mercantile shipping fleet as a whole.[125]
However, it is worth noting that currently no ships are on the AISR.[126]
The Bill does contain one unresolved issue in relation to
who can apply for a coastal shipping permit. Currently the Act provides that ‘the
owner, charterer, master or agent of the vessel’,[127]
a person of a kind prescribed by the regulations or ‘a shipper’ can apply for a
general, temporary or emergency licence.[128]
In contrast, proposed subsection 13(1) provides that only a person with
the requisite type of legal or beneficial interest or who ‘has day-to-day
responsibility’ for the management a vessel may apply for a coastal shipping
permit, and hence would appear to exclude charterers and their brokers (i.e.
agents). As noted by one commentator:
Charterers and their brokers appear not to be eligible to
apply for a permit under the proposed system, although this remains to be
clarified... there is no clear guidance in the Bill whether applications would be
accepted when made by a local representative on behalf of a foreign vessel operator
or manager. Obtaining necessary local law approvals for a voyage to proceed is
often the charterer's task, being the party with the relevant local knowledge.[129]
(emphasis added).
Whilst proposed subsection 13(1) as drafted appears
to introduce some uncertainty in this regard, it would appear that proposed
section 112A (at item 30 of Schedule 1 to the Bill) would allow the
Minister to issue a legislative instrument to provide that charterers and
brokers are, for the purpose of proposed subparagraph 13(1)(b)(ii),
considered to have ‘day to day responsibility for the management of the
vessel’, at least in relation to the coastal permit application process.[130]
However, until such time as a relevant legislative instrument clarifying the
position in relation to charterers and brokers comes into effect, the
uncertainty around who can apply for a coastal trading permit is likely to
remain.
Proposed section 14 provides that applications for
coastal shipping permits can be varied or withdrawn at any time before the Minister
determines the application.[131]
Application requirements and obligation for foreign vessels to lodge a term
declaration
Proposed subsection 13(2) imposes a number of
requirements in relation to the application including that it must be in
writing, must be accompanied by a copy of the vessel’s registration
certificate, and other evidence of the relevant legal or beneficial interest or
evidence that the applicant has day-to-day responsibility for the management of
the vessel.[132]
In relation to applications to transfer a permit, the application must also
include certain types of information that proposed subsection 36(1) requires
must be included in coastal shipping reports as well as information regarding
whether the vessel was docked for service during the period the applicant held
the permit that is sought to be transferred.
Importantly however, in relation to an application for a
permit, if the vessel is a foreign vessel (that is, registered under the laws
of a foreign country) the application must include a ‘term declaration’. [133]
A term declaration is defined in proposed subsection 13(3) as:
.... a declaration stating whether or not it is the intention
of the applicant for the permit that the vessel to which the permit relates
will be used to engage in coastal shipping on more than 183 days during
the normal period of the permit. (emphasis added)
The requirement to declare whether the vessel will engage
in coastal trading for more than 183 days is a critical feature not only of the
permit application process for foreign flagged vessels, but for the coastal
trading permit system as a whole, for the reasons discussed below.
The Bill will allow foreign vessels to engage in coastal
shipping year-round. However, the 183 day rule will offer a limited form of
protection to both Australian shipping from foreign competition, although arguably
at the expense of economic efficiency.[134]
That limited protection is in the form of a degree of competitive neutrality,
at least in regards to wage costs. This is because under the regime proposed by
the Bill, foreign vessels that either intend to (or actually engage in) coastal
shipping for more than 183 days will be subject to Australian wage and crewing
requirements (discussed below under the headings ‘The parity condition’ and ‘Minimum Australian crewing requirements’).[135]
In contrast, foreign vessels that engage in coastal shipping for less than 183
days are not required to pay Australian wages or have a minimum number of
Australian crew on board.[136]
As a result, foreign ships that engage in year-round coastal
trading (or at least for more than 183 days) will have their cost advantage
over Australian shippers (lower wages costs) partly ameliorated. However, as
foreign ships that engage in coastal trading for less than 183 days are not
required to pay Australian wages, it is possible that foreign shipping companies
will simply ‘cycle’ vessels of a similar size and purpose that they own, lease
or charter for periods of less than 183 days each, thus ensuring year-round
coverage for their clients without incurring Australian wage costs. This is
because the permits attach to individual vessels, not the entities that own,
lease or control them. In such circumstances, foreign vessels would appear to
have a substantial competitive advantage over Australian shippers, at least in
relation to wage costs.
Abolition of the notice and
response system
A key feature of the Bill is the abolition of the ‘notice
and response’ system. As noted earlier, this currently mandates that when a
foreign registered vessel applies for a temporary licence all appropriately
licenced Australian vessels have the right to be notified of the proposed
voyages of that foreign vessel and to effectively negotiate or compete for that
cargo, with the Minister determining whether or not to grant the licence where
negotiations are unsuccessful.[137]
The ‘notice in response’ system was described by the Transport Committee as
setting up ‘a form of mediated competition’ between Australian and foreign
vessels.[138]
The Bill will abolish the notice and response system, which
the Government argues is a deregulatory measure that will lead to ‘savings in
administration costs’ to both industry and government.[139]
Factors the Minister must consider
in deciding whether to grant a coastal shipping permit
Proposed section 15 deals with the factors relevant
to the Minister’s decision to grant or refuse a coastal shipping permit.[140]
A decision must be made within 10 business days (in the case of permit
applications) or two days (in the case of transfers) after an application is
made or varied.[141]
When determining an application, proposed subsection 15(2) provides that
the Minister may have regard to:
- whether
the applicant previously held a coastal shipping permit or licence under the
Act that was cancelled
- whether
the applicant had at any time been issued with an infringement notice under the
Act (or relating to a civil penalty provision)
- whether
a court had ordered the applicant to pay a pecuniary penalty (or for
contravening a civil penalty provision) under the Act
- whether
the Minister is satisfied that the applicant had previously breached a
condition of a coastal shipping permit or other licence under the Act and
- any
other relevant matters.[142]
The above indicate that a key focus in deciding whether to
grant a coastal trading permit is the previous conduct of the applicant.
However, as the CSL Case makes clear, the inclusion of the ‘any other
relevant matters’ gives the Minister a degree of flexibility in regards to what
factors they will consider when deciding coastal shipping permit applications.[143]
In addition however, proposed subsection 15(3)
provides that where a foreign vessel applies for a permit, the Minister must
have regard to whether:
- a
term declaration for a permit previously held stated an intention that the
vessel would not be used to engage in coastal shipping for more than 183 days
during the 12 month permit period and
- the
vessel was then used for more than 183 days during the 12 month permit period.[144]
In contrast to the factors that the Minister may
have regard to under proposed subsection 15(2), proposed paragraph
15(3)(b) requires that the Minister must have regard to the ‘object
of this Act’ when considering an application in respect of a foreign vessel
from an applicant who has previously held a permit for a foreign vessel.[145]
In summary, as currently drafted:
- proposed
subsection 15(2) does not directly require the Minister to consider the
broader objects of the Act and related relevant commercial factors when
deciding applications for permits for Australian vessels (noting however that proposed
paragraph 15(2)(e) nonetheless provides the Minister the discretion to
consider such issues[146])
but
- proposed
subsection 15(3) requires the Minister, when deciding applications for
coastal shipping permits by applicants who have previously held a coastal
shipping permit for a foreign vessel, to consider the object of fostering a
competitive coastal shipping industry and maximising the use of available
shipping capacity on the Australia coast, and thus arguably related commercial
issues.
When applications in relation to
certain foreign vessels must automatically be refused
Proposed subsection 15(4) provides that the Minister must
not grant a coastal shipping permit to a foreign vessel if the applicant
has not complied with the parity condition (discussed below) of a coastal
shipping permit previously.[147]
Importantly this requirement attaches to the applicant, rather than the vessel.
As a result, where an applicant did not comply with the parity condition
of a coastal shipping permit in relation to one vessel, but then applies for a
coastal shipping permit for a different vessel (or the same vessel) the
Minister must refuse the application (this is because whilst a permit is
granted to the applicant, it ‘attaches’ to a single vessel).[148]
Circumstances in which applications
must be automatically granted
Proposed section 19 provides that where the Minister
has not decided an application for a coastal shipping permit within the 10
business day period mandated by proposed subsection 15(5), the
application is automatically granted.[149]
However, if the granting of the permit would result in more than one permit
being in force in relation to the vessel simultaneously, it is taken to have
been automatically refused.[150]
As with other permits, those automatically granted under this provision remain
in force for 12 months.[151]
Mandated post application
determination actions
Proposed sections 17, 20, 21, and 29–31 deal
with information that must be provided to applicants after a permit or transfer
application is determined, and also what information must be made publically
available.
Information to be included in a
permit
If an application is granted, proposed subsection 20(1)
requires the Minister (as soon as is practicable) to give the permit to the
applicant.[152]
Proposed subsection 20(2) mandates that the following information must
be specified in the permit:
- the
permit number
- the
holder of the permit and their business name and business address
- the
vessel to which the permit relates (including its name and International
Maritime Organisation (IMO) number)
- the
conditions to which the permit is subject under proposed section 22
(discussed below)
- any
additional conditions imposed on the permit under proposed section 23
(discussed below)
- the
day the permit comes into force and the period for which the permit is in force
and
- any
other matters prescribed by the rules.
Importantly, where a permit relates to a foreign vessel, proposed
paragraph 20(2)(f) provides that the permit must also specify whether the
applicant intends to use the vessel for coastal shipping on more than 183 days
during the normal period of the permit (12 months), that is, the term
declaration.
Information about permits that must
be published does not include term declaration details
Proposed section 17 provides that the Minister must
publish the above information, other than any conditions imposed under proposed
section 22 (discussed below). It is not immediately clear why proposed
section 17 does not mandate the publication of conditions imposed by proposed
section 22 such as the parity condition or the term declaration. It could
be argued that disclosing whether the applicant intends to use the vessel for
coastal shipping on more than 183 days during the permit period could assist in
non-government parties monitoring compliance with any parity condition
imposed on the vessel (discussed below). However, it may be possible to
ascertain from the information published whether or not a foreign vessel intends
to engage in coastal shipping on more than 183 days.
In relation to applications to transfer a permit, proposed
section 31 provides that where an application is granted, the Minister must
update the information about the permit published on the Department’s website.
Information to be included when an
application is refused
Proposed section 21 provides that where an application
is refused, the Minister must inform the applicant in writing of the decision
and the reasons for it.[153]
The Bill does not impose any requirement to publish information about refused
applications.
Review of permit application and
transfer decisions
Proposed section 107 (at item 31 of Schedule
1 to the Bill) provides that any decision by the Minister to refuse to grant a
transfer or permit can be reviewed by the AAT.
Imposing conditions on permits
Proposed sections 22 and 23 deal with various
mandatory conditions that all permit holders must comply with, as well as the
power of the Minister to impose additional conditions at his or her discretion
(discussed below).
Mandatory conditions
Proposed subsection 22(1) imposes a number of
conditions on all coastal shipping permit holders including:
- the
vessel must continue to be registered on either the AGSR, AISR or under the
laws of a foreign country
- a copy of the permit must ‘be displayed on the vessel in a conspicuous place
accessible to all persons on board at all times when the vessel is being used
to engage in coastal shipping’
- compliance
with the reporting requirements imposed by proposed sections 35 and 36
(for example, number of passengers carried, kind and volume of cargo carried
and so forth) and
- any
other conditions prescribed by the rules.
In addition to the above conditions, proposed
subsection 22(2) provides that where the permit relates to a foreign vessel
and:
- the
term declaration stated an intention that the vessel engage in coastal shipping
on more than 183 days during the permit period and
- it
subsequently engages is coastal trading for more than 183 days during the
permit period then
- the
vessel will be subject to the parity condition imposed by proposed
subsection 22(3), discussed below.
In addition to the imposition of the parity condition
on foreign vessels that engage in coastal shipping for more than 183 days in
the permit period, proposed paragraph 22(1)(d) provides that such
foreign vessels must also comply with the mandatory minimum Australian crewing
requirements imposed by proposed section 38 (discussed below).
Optional conditions
Proposed section 23 provides that the Minister may
impose additional conditions on a coastal shipping permit, provided that any
such conditions are not inconsistent with those imposed by proposed section
22. Whilst the Bill’s Explanatory Memorandum notes that ‘the ability for
the Minister to impose additional conditions currently exists for general and
temporary licences and it will allow the Minister to impose an additional
condition on an individual permit if required’, no examples of the types of
conditions that may be imposed are given.[154]
The parity
condition and when Australian wages must be paid to foreign seafarers
Proposed subsections 22(2) to 22(4) deal with
the imposition of the parity condition. The parity condition is part of the
‘key protections’ for foreign seafarers on vessels engaged predominantly in
coastal shipping in Australian water.[155]
It provides that:
- if
a seafarer is an employee on board the foreign vessel after the permit period
commences but
- before
the use of the vessel to engage in coastal shipping exceeds 183 days and
- the
seafarer was not paid the notional award amount that the seafarer
would have been paid if the FWA applied to the vessel because of the
operation of proposed section 41 (at item 41 of Schedule 1 to the
Bill) then
- the
holder of the permit must pay the seafarer, or must ensure that the seafarer is
paid an amount (the parity amount) equal to the difference (if any)
between the notional award amount and the amount that the seafarer has already
been paid in respect of that employment.
In effect this means that foreign vessels that engage in coastal
shipping in Australian waters for less than 183 days are not required to pay
Australian wages, resulting in a cost saving through lower wage overheads. This
issue is discussed below under the heading ‘Cost savings to businesses’.
However, proposed subsections 22(2) to 22(4)
also have the effect of ensuring that foreign seafarers on foreign vessels that
engage in coastal trading for more than 183 days are provided payment at least
at the rates specified in Part B of the Award. Proposed section 22(4)
provides that the parity amount must be paid within the timeframe provided in
the rules. Proposed subsection 15(4) provides that the Minister must not
grant a coastal shipping permit to a foreign vessel if the applicant has not
complied with the parity condition (discussed below) of a coastal
shipping permit previously.[156]
As a result, where a permit is breached (for example, by failing to comply with
the parity condition) the Minister will be required to refuse any future permit
applications from that applicant, effectively locking them out of Australia’s
coastal shipping industry. Whilst the same mandatory ‘lock out’ does not apply
to domestic applicants who have previously breached a permit condition, when
viewed as a whole the consequences of breaching the proposed civil penalty
provisions would appear likely to operate as an effective deterrent against
breaches of permit conditions, especially for foreign vessels.[157]
One of the key aspects of the Bill is a partial return to
the system in place under the Navigation Act, that is, providing that
foreign vessels are generally not required to pay Australian wages to the crew
whilst engaged in coastal shipping in Australian waters (noting the impact of
the proposed 183 day rule and parity condition in this regard). The Government
argues that:
...the cost of Australian domestic shipping services is
uncompetitive on a global scale and the movement of manufacturing inputs
and completed products on the Australian coast can be more expensive than
importing inputs or finished products from other countries.[158]
(emphasis added)
Further, the Government noted that many stakeholders have
argued that the ‘primary driver’ of the higher cost of coastal shipping in
Australia was ‘seen to be high Australian wage costs relative to foreign vessel
wage costs’, but also noted that other costs ‘related to the high average age
of Australian vessels, such as higher fuel consumption and insurance premiums’
were also factors.[159]
Similarly, the Transport Committee also noted that the high cost of Australian
wages (compared to those paid to foreign seafarers generally) was perceived to
be a contributor to the overall cost of coastal shipping in Australia, and
therefore to its competitiveness in a global marketplace.[160]
The Transport Committee stated that it ‘heard considerable criticism of
increases in shipping costs’ as a result of introduction of the Act, but also
noting that the Act ‘had not increased costs in the containerised freight
segment of the industry’.[161]
The Transport Committee noted that the precise savings to
businesses flowing from a reduction in wages paid to foreign seafarers engaged
in coastal shipping in Australian water for less than 183 days ‘was the subject
of considerable discussion’ and criticism.[162]
However, the Transport Committee noted that, based on estimated foreign
seafarer wages, Australian crews effectively imposed ‘a 15–20 percent disadvantage
against international ships in terms of operating costs’.[163]
It noted that the submissions to its inquiry into the Bill that supported the
proposed changes argued that the Bill would reduce the cost of shipping, and
ultimately concluded that the measures in the Bill that would reduce the wage
costs associated with coastal shipping in Australia, and therefore its overall
cost, would ‘benefit the economy generally’.[164]
Consequences for breaching permit
conditions
Proposed section 24 creates a civil penalty for
breaching a condition of a permit. Specifically, it provides that where a
person breaches a permit condition (either through an act or an omission)
imposed by proposed sections 22 or 23, they are liable for a
civil penalty:
- in
the case of an individual: maximum of 50 penalty units ($9,000) or
- in
the case of a body corporate: maximum of 250 penalty units ($45,000).[165]
The framework for enforcing civil penalties via
infringement notices and court proceedings, along with which persons have
standing to do so, are examined under the heading ‘Enforcement of penalties’ below.
Consequences for failing to pay
Australian wages when required
As discussed above the requirement to pay Australian wages
to foreign seafarers on vessels engaged in coastal shipping in Australian
waters for more than 183 days is imposed via the parity condition.[166]
As a result, proposed section 24 applies to any failure to pay Australian
wages when required (that is, to pay the parity amount), with breaches
attracting the fines discussed above.
Standing to seek payment of unpaid
Australian wages
Proposed section 93 (at item 39 of Schedule 1
to the Bill) deals with court actions to recover unpaid wages in circumstances
where the parity condition was breached by a permit holder (that is, the parity
amount had not been fully paid). Proposed subsection 93(2) provides that
only the seafarer or a ‘person prescribed by the rules’ (with the written
consent of the seafarer) may apply for a court order requiring payment of the
amount not paid.[167]
Neither the Bill’s Explanatory Memorandum nor the Second
Reading Speech provide any detail as to which persons, other than the seafarer,
are likely to be ‘prescribed by the rules’ and thus have standing to commence
an action for unpaid wages (provided they have the seafarers consent to do so).
Whilst it would appear likely that the Secretary of the Department (or their
delegates) would be prescribed, another possibility may be officers of the Fair
Work Ombudsman or officers of a relevant registered organisation (that is, a
trade union) will be prescribed.
Proposed section 38 provides that foreign vessels
with a coastal shipping permit are required to adhere to minimum Australian crew
requirements where:
- the
term declaration lodged with the permit application stated an intention that
the vessel would be used to engage in coastal shipping for more than 183 days during
the permit period or
- during
the period the permit is in force, the vessel engaged in coastal shipping for more
than 183 days.[168]
Proposed subsection 38(2) provides that the
Australian crew requirements are that for the entire period in which the permit
is in force that either:
- the
master or the chief mate and
- the
chief engineer or the first engineer
must be an Australian citizen, Australian resident or ‘a
person who holds a visa prescribed by the rules’ that allows them to work in
Australia as a master, chief mate, chief engineer or first engineer. Clearly,
this means that persons who are not Australian citizens or residents can be
employed in the roles listed above on a vessel. As a result, the proposed
‘Australian’ crew requirements in proposed section 38 will potentially
allow vessels to be crewed entirely by persons who are not Australian citizens
or residents.
The Transport Committee noted that such persons ‘will be
subject to domestic workplace relations arrangements’.[169]
The proposed minimum Australian crewing requirements have attracted both
support and criticism. For example, the Business Council of Australia stated that,
in its view, the Bill as a whole would ‘lift competition and significantly
reduce costs on business’ and that the Australian crewing requirement was ‘designed
to strengthen skills development and employment opportunities.’[170]
In contrast, the National Maritime Training Partnership was
critical of the proposed minimum Australian crew requirements, stating that
they are not ‘robust enough in policy terms to ensure the right quality and
quantity of maritime skills are retained by Australian nationals’ and also
expressed the view that ‘if experience on board ships is denied to Australians,
then these critical functions too will inevitably be assigned to the ‘international
marketplace’’.[171]
Another issue raised by proposed paragraph 38(2)(e) is
the lack of clarity around precisely what types of visas allow a person to
‘work in Australia’ in the specified positions are appropriate, and will be
specified in the rules. For example, Maritime Industry Australia Ltd stated:
Arguably, a Maritime Crew Visa – which is supposed to be a
transit visa – provides precisely that right. Quite clearly any type of
temporary work visa holder (s457, 400) is eligible. The government should
clearly state whether these visas are considered to be appropriate. Regardless,
the proposed amendment would do nothing to secure the critical skills base as
any temporary work visa could be used.[172]
Likewise the Maritime Union of Australia stated that the
Bill would ‘allow foreign seafarers to enter and work in Australia on an
indefinite basis without requiring a work visa, through multiple port visits’.[173]
However, it is not immediately clear if the above views are correct. A Maritime
Crew Visa (subclass 988) (MCV) is a temporary three-year visa designed to facilitate
the temporary entry of foreign seafarers to work in line with ‘the usual
operational requirements of their ship’. [174]
Hence whether it can be said to allow them to ‘work in Australia’ (which arguably
implies being subject to Australian employment laws such as the FWA) is
open to debate. Ultimately however, until such time as rules are made
specifying the types of visa that allow a person to ‘work in Australia’ in the
relevant positions specified by proposed paragraph 38(2)(e) is produced,
the issue will remain unresolved.
Consequences for failing to meet
minimum Australian crew requirements
Proposed subsection 38(3) creates a civil penalty for
failing to meet the minimum Australian crew requirements. Where the Australian
crew requirements are not met, the permit holder is liable for a civil penalty:
- in
the case of an individual: maximum 50 penalty units ($9,000) or
- in
the case of a body corporate: maximum 250 penalty units ($45,000).[175]
The framework for enforcing civil penalties via
infringement notices and court proceedings, along with which persons have
standing to do so, are examined under the heading ‘Enforcement of penalties’ below.
Reporting Requirements
Currently the Act requires both pre-voyage notification (at
least two days before the actual loading date) and post-voyage reporting
(within 10 days after the end of a voyage).[176]
The Bill will simplify the reporting requirements for permit holders by eliminating
the pre-voyage reporting obligation entirely, and replacing the post-voyage
reporting requirements with a requirement to report on voyages undertaken at
six-monthly intervals (or more frequently if directed by the Minister).[177]
Contents of the reports
Proposed section 36 specifies the information that
must be included in reports produced by permit holders. It provides that all of
the following information must be included in relation to each voyage
undertaken during the reporting period by the vessel to which the report
relates:
Table 3: mandatory content of reports
What was carried
|
Specified information
|
Passengers
|
- the
number of passengers carried
- the
port at which the passengers embarked
- the
date that embarkation began
- the
port at which the passengers disembarked and
- the
date that disembarkation finished.
|
Cargo
|
- the
kinds and volumes of cargo carried
- the
port at which the cargo was taken on board
- the
date that loading began
- the
port at which the cargo was unloaded and
- the
date that unloading finished.
|
Liquid fuel product
|
- each
type, and the volume of each type, of liquid fuel product carried
- the
port or offshore facility at which the liquid fuel product was taken on board
- the
date that loading began
- the
port at which the liquid fuel product was unloaded and
- the
date that unloading finished.
|
Source: proposed section 36 of the Act.
In addition to the above, proposed section 36 also
provides that the following information must be included:
- any
other information prescribed by the rules[178]
- the
total number of days during the reporting period on which the vessel was used
to engage in coastal shipping and
- whether
the vessel was docked for service during the reporting period for the permit,
and, if so, the days that the vessel was docked for service.[179]
Proposed subsection 36(3) provides that the reports
must be given to the Minister within 15 business days after the end of the
reporting period concerned, unless the report has been produced in response to
a request from the Minister for an interim report under proposed subsection
35(3), in which case the report must be lodged within 10 business days of
the request being given.
Consequences for failing to lodge
reports
Proposed subsection 36(4) creates a civil penalty for
failing to lodge reports within the time required. Where a report is not lodged
on time (or not at all), the permit holder is liable for a civil penalty:
- in
the case of an individual: maximum 50 penalty units ($9,000)
- in
the case of a body corporate: maximum 250 penalty units ($45,000).[180]
The framework for enforcing civil penalties via infringement
notices and court proceedings, along with which persons have standing to do so,
are examined under the heading ‘Enforcement of penalties’ below.
Publication of the reports
Proposed section 37 provides that the Minister must
cause a summary of the information contained in the reports that are given to
the Minister during each financial year to be published on the Department’s
website.
Proposed section 83 of the Act (at item 39 of
Schedule 1 to the Bill) provides that the civil penalty provisions contained in
the Bill will be enforceable under the Regulatory Powers (Standard
Provisions) Act 2014 (Regulatory Powers Act).[181]
Proposed sections 86 and 91 provide that the enforcement
framework extends to every external Territory. Background information on the
framework created by the Regulatory Powers Act can be found in the Bills
digest for that Act.[182]
Infringement notice regime
For the purposes of the Regulatory Powers Act, the
Bill provides that in relation to the civil penalty provisions the Secretary is
the authorised applicant and the Federal Court and Federal Circuit Court are
the relevant courts.[183]
Proposed sections 87 to 92 create an infringement
notice regime. A description of infringement notices is set out in the
Explanatory Memorandum to the Regulatory Powers Act:
An infringement notice is a notice of a pecuniary penalty
imposed on a person by statute setting out particulars of an alleged
contravention of a law ... Infringement notices are administrative methods for
dealing with certain breaches of the law and are typically used for low-level
offences and where a high volume of uncontested contraventions is likely.[184]
Section 103 of the Regulatory Powers Act provides
for when an infringement notice may be given. In particular, subsection 103(1)
provides that where an infringement officer has reasonable grounds to believe
that a person has contravened (in the case of the Bill) a civil penalty
provision subject to an infringement notice under Part 5 of Regulatory
Powers Act (which proposed section 87 provides applies to the civil
penalty provisions in the Bill), the infringement officer can issue an
infringement notice.
Section 104 of the Regulatory Powers Act sets out a
number of details that must be included in an infringement notice, including
the person to whom the notice is directed, the time and method of payment and
the consequences of non-compliance with the notice. Proposed section 92 provides
that the penalty payable in respect of an infringement notice ‘must be equal to
one-fifth of the maximum penalty that a court could impose’ for the
contravention.
Cancellation of permits
As noted above, breaching a condition of a coastal shipping
permit (including the reporting and Australian crew requirements) attracts a
civil penalty.[185]
Proposed section 32 provides that the Minster may issue a ‘show cause
notice’ if the Minister reasonably believes that a condition of a permit has
been breached.
Proposed subsection 32(2) provides that a show
cause notice must state the grounds on which it is given and invite the permit
holder to give (within 10 business days from when the notice is issued) a
written statement showing cause why the permit should not be cancelled. Proposed
section 33 deals with the cancellation of permits. Briefly, after
considering any written statement in response to a show cause notice, the
Minister may cancel a permit if they are satisfied that a condition of the
permit has been breached. If a decision is made to cancel a permit, proposed
subsection 33(2) provides that the Minister must inform the permit holder
of the decision in writing, the reasons for it and the effect of proposed
subsection 33(3). Proposed subsection 33(3) provides that where a permit
is cancelled and the holder does not return it to the Minister within 10
business days, the permit holder is liable for a civil penalty:
- in
the case of an individual: maximum 50 penalty units ($9,000) or
- in
the case of a body corporate: maximum 250 penalty units ($45,000).[186]
Proposed section 107 (at item 31 of Schedule 1
to the Bill) provides that any decision to cancel a permit can be reviewed by
the AAT. Proposed section 40 provides that were a permit is cancelled,
no compensation is payable.
Transitional provisions
The Bill contains a number of important transitional
provisions that deal with the operation of a modified version of the existing
licencing scheme during a yet-to-be-determined transition period.
Transition period
Items 44–46 of Schedule 1 of the Bill include
a number of important transitional provisions. Item 44 creates a
‘transitional period’. The transitional period will commence no later than six
months after the Bill receives Royal Assent and will end immediately before
Part 2 of Schedule 1 of the Bill commences (no later than six months after the Bill
receives Royal Assent).[187]
Modified continued operation of existing
licences
Item 45 provides that the certain parts of the ‘old
law’ related to licensing (defined as the Act and related legislation as in
force immediately before the commencement of Part 1 of Schedule 1
of the Bill) will continue in operation during the transition period as if the
various repeals and amendments made by the Bill had not happened, subject to
the following modifications:
- all
licences in force or issued during the transition period remain in force until
the end of the transition period (unless cancelled) even if they are due to
cease prior to the end of the transition period
- any
person may apply to the Minister for a Temporary Licence (or to vary a
temporary licence) during the transition period but the ‘notice and response’
process will no longer apply and
- licence
holders must provide reports as required for all voyages (even after the
transition period ends), thus ensuring that all reports they are obliged to
lodge for voyages undertaken under a licence are provided.[188]
The effect of the transitional arrangements noted above is
to immediately remove the ‘notice and response’ system, whilst allowing for the
continued operation of existing licences. This will provide a degree of
business certainty to existing licence holders, whilst immediately reducing the
regulatory burden imposed by the ‘notice and response’ processes on foreign vessels.
Application and modification of the
Award
Proposed section 41 (at item 41 of Schedule 1
to the Bill) will ensure that Part B of the Award applies to foreign
vessels with a permit, despite the Award referring to a type of licence that
will be abolished. Proposed subsection 41(1) provides that Part B of the
award will apply to seafarers employed on a foreign vessel where Part A of the
Award does not apply to the vessel and:
- the
vessel is registered under the law of a foreign country
- the
FWA applies to the vessel and
- a
permit is in force in relation to the vessel.
This provision raises a number of issues, as noted below.
However, it is worth noting that the drafting of both proposed section 41
and proposed section 61AKA of the Shipping Registration Act 1981 (at
item 43 of Schedule 1 to the Bill) attracted
criticism, with one submission to the Transport Committee’s Inquiry into the
Bill stating that ‘we cannot discern the meaning of this provision’ and
expressing concern at the confusion arising ‘as a result of regulations being
used to override/amend the Award provisions’.[189]
Does the Fair Work Act apply to the
vessel?
Normally an ‘Act is taken to have effect in, and in
relation to, the coastal sea of Australia as if that coastal sea were part of
Australia’.[190]
(In this context the Acts Interpretation Act 1901 defines ‘coastal sea’ as
the territorial sea of Australia and the sea on the landward side of the
territorial sea that is not within the limits of a state or territory).[191]
As a result, the normal position would be that the FWA would apply to vessels
in Australia’s coastal seas. Currently the FWA applies to ‘Australian’
vessels (that is, those operated by an ‘Australian employer’ or are operated by
‘Australian employees’.[192]
The FWA also currently applies to most foreign vessels operating in
Australia’s coastal waters, other than those transiting through Australia’s
coastal water.[193]
In addition to having effect in relation to Australia’s
coastal seas, subsection 33(1) of the FWA deals with application of that
Act to vessels in Australia’s exclusive economic zone or in the water above the
continental shelf.[194]
Importantly, this would normally not capture most foreign vessels unless the
vessel:
- supplies
or otherwise services a fixed platform within Australia’s exclusive economic
zone or in the water above the continental shelf and operates to or from an
Australian port or
- is
operated or chartered by an Australian employer and uses Australia as a base.[195]
Subsection 33(3) allows regulations to be made to apply
the FWA to activities taking place in Australia’s exclusive economic
zone or in the water above the continental shelf.
In turn, the Fair Work Regulations does just that by extending
the application of the FWA to ensure that seafarers who work ‘regularly
in the Australian coastal trade have the benefit of Australian workplace
relations laws and a legislative safety net of employment terms and conditions’.[196]
Put another way, the FWA currently applies to most foreign vessels
engaged in activities in Australia’s coastal water, exclusive economic zone or
in the water above the continental shelf, other than innocent passage or
transit passage.
The Government has indicated an intention that the FWA
will continue to apply to foreign vessels that engage in coastal shipping for
more than 183 days in Australian waters.[197]However,
as the FWA Regulations 2009 are expressed as applying to vessels granted various
types of licenses under the Act that will cease to exist if the Bill is passed,
they will not capture foreign vessels with permits and hence the FWA will
not apply to such vessels until the FWA Regulations are amended to give effect
to the Bill’s intention.
Proposed subsection 41(2) allows regulations to be
made that amend the effect of the Award for the purpose of removing
uncertainties, ambiguity or to correct errors, technical deficiencies or
omissions (for example, references to a defunct licence category). However, as
noted by the Australian Industry Group, the FWA Regulations must be amended ‘to
ensure that they give effect to the Bill’s intention’.[198]
Put simply, until such time as the FWA Regulations are amended to refer to
coastal shipping permits, the FWA will not apply to foreign vessels with
a coastal shipping permit, and hence Part B of the Award (even if amended) would
not apply to such vessels.
Similarly, proposed section 61AKA of the Shipping
Registration Act 1981 (at item 43 of Schedule 1 to the Bill) provides
that Part B of the Award will apply in relation to seafarers employed on board
a vessel registered on the AISR to which the FWA applies. It also allows
regulations to be made that amend the Award for the purpose of removing
uncertainties, ambiguity or to correct errors, technical deficiencies or
omissions (for example, references to a defunct licence category). The
Australian Industry Group noted that ‘this power would be used to amend the
coverage of Part B of the Seagoing Award to reflect the new proposed licensing
system’ and expressed the view that ‘this approach is sensible given that the
coverage of the Seagoing Award is an essential element of the proposed
changes.’[199]
Amendments to the Shipping
Registration Act 1981
In addition to proposed section 61AKA (discussed
above), the Bill makes a number of other amendments to the Shipping
Registration Act, discussed below.[200]
Reduction in time vessel must be
engaged in international trading
Item 14 of Schedule 3 of the Bill will repeal
the definition of ‘predominately used to engage in international trading’.
This, along with introduction of the 90-day requirement proposed by proposed
subsection 15F(3), means that vessels will ‘only be required to engage in
international trading for a period of 90 days before being eligible for
registration’ on the AISR.[201]
Removal of requirement to have a collective
agreement
Currently paragraph 15C(c) of the Shipping Registration
Act requires that an application for registration of a vessel on the AISR
requires ‘evidence that a collective agreement has been made under section 11A’
of that Act. Importantly however, subsection 11A(4) provides that the FWA
does not apply in relation to the making of a collective agreement under that section,
and that such a collective agreement is not an enterprise agreement for the
purposes of the FWA .
Item 6 of Schedule 2 of the Bill repeals
paragraph 15C(c) of the Shipping Registration Act, the effect of this proposed
amendment is that whilst the ability to make a collective bargaining agreement
under section 11A will remain, it will no longer be a mandatory requirement for
registration on the AISR. The Transport Committee noted that ‘despite what
appear to be generous tax incentives, there are currently no ships registered
on the AISR’.[202]
The Transport Committee noted that possible explanations for the lack of interest
in the AISR included:
- perceived
‘unionised industrial reputation’[203]
and
- ‘the
requirement for any ship seeking registration on the AISR to have a collective
agreement with the ‘seafarer’s bargaining unit’ comprised of relevant maritime
unions (and the absence of any alternative such as negotiating directly with
the seafarers) is likely to have operated as a deterrent to registration’.[204]
It would appear that the removal of the requirement to
have a collective agreement in place as a pre-condition to registration on the
AISR proposed by item 6 of Schedule 2 of the Bill is designed to
allow employers a greater degree of flexibility in regards to workplace
relations on board vessels, including allowing negotiating directly with
seafarers on an individual (instead of a collective) basis.
Mandatory refusal to register a
vessel onto the AISR
Proposed subsections 15F(3) – (3B) of the Shipping
Registration Act provides that the Registrar must refuse to register a ship
in the AISR if satisfied that the ship will not be used to engage in at least
90 days of international trade in the following financial year, or pro-rata
amount (when there is less than a full year remaining in the financial year at
the time the application is made). This will ensure that a vessel joining the AISR
part way through a financial year is not obligated to undertake the 90 days of
trading in the remaining part of that financial year. Proposed subsection
15F(3B) provides that days on which passengers embark or disembark, or
cargo is loaded or unloaded, will be counted as days in which the vessel is
engaged in international trade.
Changes related to minimum
Australian crew requirements
Currently section 33A of the Shipping Registration Act
provides that it is a condition of registration on the AISR that the vessel
must ensure that an Australian national or Australian resident:
- is
the master or chief mate of the vessel and
- is
the chief engineer or first engineer of the vessel.[205]
Further to the above, subsection 33A(2) provides that it is
a condition of registration of a vessel on the AISR that the owner or operator
of the vessel (as the case may be) ‘must take reasonable steps to ensure that
the positions of master and chief engineer are occupied by a person who is an
Australian national or Australian resident’.
The Bill seeks to amend subsection 33A(1) of the Shipping
Registration Act 1981 to expand the scope of those who hold senior crew
positions on AISR vessels to include people who have Australian work rights
without necessarily being Australian residents or nationals (that is,
Australian citizens). Items 8, 9 and 10 of Schedule 2
of the Bill do so by adding the words ‘who holds a visa that allows the person
to work in Australia’, thus allowing persons with an appropriate visa to
qualify for the Australian crew requirements, even if those persons are not
Australian citizens or residents. This provision attracted some criticism, with
Maritime Industry Australia Ltd stating:
These amendments provide for a person who holds a visa that
allows the person to work in Australia in the specified roles to be included in
addition to an Australian resident... a Maritime Crew Visa—which is supposed to
be a transit visa—provides the right to enter Australia as a crew member on
board foreign or AISR ships. Quite clearly any type of temporary work visa
holder (s457, 400) is eligible. The Government should clearly state whether
these visas are considered to be appropriate. Again, the proposed amendment
would do nothing to secure the critical skills base as any temporary work visa
could be used.[206]
However, for the reasons noted above, it is not
immediately clear if the view that the proposed amendments to subsection 33A(1)
of the Shipping Registration Act 1981 would allow a holder of a Maritime
Crew Visa to hold the relevant senior positions is correct. The amendments
would, however, certainly facilitate certain other types of visa holders
holding the identified positions and thus potentially enable vessels to be
registered on the AISR with a crew composed entirely of persons who are not
Australian citizens or permanent residents. Ultimately however, until such time
as rules are made specifying the types of visa that allow a person to ‘work in
Australia’ in the relevant positions are produced, the issue will remain unresolved.
Importantly however, at least compared to the conditions currently
imposed by the Act on general licence holders, this does not represent a
substantial change. This is because currently paragraph 21(b) of the Act
provides that when a vessel with a general licence is engaged in coastal
shipping ‘each seafarer working on the vessel’ must be an Australian citizen, hold
a permanent visa or ‘hold a temporary visa that does not prohibit the seafarer
from performing the work he or she performs on the vessel’. In other words,
currently the Act allows Australian vessels to employ foreign nationals who
hold an appropriate class of visa. Theoretically at least, this allows a vessel
with a general licence to be entirely foreign-crewed.[207]
The Bill would not change that.
New power to cancel registration in
certain circumstances
Item 11 of Schedule 2 of Bill seeks to amend
subsection 33B(1) of the Shipping Registration Act to provide the
Registrar the power to cancel the registration of a ship on the AISR if
satisfied that the ship will not, in the financial year the cancellation will
take effect, be used to:
- engage
in international trade for at least 90 days or
- if
pro-rata number of days applies, for at least the pro-rata number of days.
The amendments will also provide the Registrar with the
power to cancel the registration of a vessel on the AISR if satisfied that the
ship was not, in a financial year preceding the financial year in which
the cancellation will take effect, used to:
- engage
in international trade for at least 90 days or
- if
pro-rata number of days applies, for at least the pro-rata number of days.
As noted in the Bill’s Explanatory Memorandum the proposed
powers in relation to cancellation are ‘consistent with the international
trading requirements required for initial registration’ on the AISR as provided
for by proposed subsections 15F(3)–(3B).[208]
Continued application of Australian
work health and safety laws to certain vessels
Items 3 to 11 of Schedule 3 of the Bill
operate to ensure that the obligations imposed on vessel licences under the
current regime by the Occupational Health and Safety (Maritime Industry) Act
1993 and Seafarers Rehabilitation and Compensation Act 1992 will
continue to apply to vessels (both Australian and foreign) with permits under
the regime proposed by the Bill.[209]
The Bill, if passed, will greatly simplify the regulation
of coastal shipping in Australia. By removing key restrictions on foreign
vessels, it would also open up the Australian coastal shipping market to
foreign competition to a much greater extent than under the current regime or
under the Navigation Act 1912. This approach is clearly consistent with
the policy basis of the Bill – emphasising and prioritising the needs of the
Australian economy as a whole (and in particular, industries that rely on or
could use coastal shipping) over the needs of the domestic coastal shipping
industry.
The 183 day rule and parity condition may offer a limited
protection against such competition, in the form of a degree of competitive
neutrality, at least in regards to wage costs. However, the Bill would not
prevent owners and operators of foreign vessels from ‘cycling’ vessels of a
similar size and purpose for periods of less than 183 days each (thus ensuring
year-round coverage for their clients without incurring Australian wage costs).
In such circumstances, foreign operators would appear to have a substantial
competitive advantage over Australian shippers, at least in relation to wage
costs, and hence it would appear likely that the 183 day rule and parity
condition will provide little, if any protection to domestic shippers against
foreign competition over the long‑term.
As a result of the limited protection offered by the 183
day rule, it would appear that increased competition in the Australian coastal
shipping market will drive down shipping costs. That said, until Part X of the Competition
and Consumer Act 2010 (which allows certain types of shipping operators to
enter cartel agreements in relation to the freight rates), it is possible that
freight rates (and other aspects of shipping) will remain at levels agreed to
by both domestic and foreign shippers. However, it would appear that on
balance, the reforms proposed by the Bill will most likely reduce coastal
shipping costs over the long-term, with residual benefits to other sectors of
the economy.
The Bill will introduce greater flexibility into the
shipping industry as a whole. Foreign vessels will be more readily able to
engage in coastal shipping between international voyages, and any vessels that
are registered on the AISR will likewise be able to engage in both
international and coastal shipping with relative ease.
Finally, the positive effects on the broader Australian
economy as a result of the reforms proposed by the Bill will come at a cost. It
would appear likely that domestic shipping will be faced with significant
competition from foreign vessels. Given the wage disparity between foreign and
Australian wages, it would also appear likely that the reforms would place
significant downward pressure on wages in the domestic shipping industry. In
addition, the so-called ‘Australian’ crew requirements, which allow non-Australian
citizens or residents with a specified visa to qualify as ‘Australian’,
undermine demand for Australian-trained crew over the longer-term.
Canada
Canada has pursued a virtual
unbroken policy of protection in relation to coastal shipping since it
inherited its coastal trade regime from Britain. The primary goal has been the
provision of a protected environment in which Canadian shipping can prosper without
being exposed to the full force of international competition.
Unfortunately, in the absence of sufficient domestic activity
to sustain a viable industry, the protection barrier has proved to be as much
an impediment to Canadian shipping seeking performance efficiencies as it has been
a barrier constraining international access to domestic markets.[210]
Canada protects its coastal shipping activities under the Coasting
Trade Act 1992 and the Customs
Tariff Act 1997.[211]
Under these laws, the only ships that have unrestricted access to coastal
shipping are those registered in Canada and either built in Canada or, if not
built in Canada, on which all applicable duties have been paid. The Customs
Tariff Act sets the import duty on imported ships at 25 per cent of the
fair market value of the vessel for most types of ship. It should also be noted
that any foreign built vessel seeking to be registered in Canada is often
required to incur substantial additional expenditure to meet registration
requirements as set out in the Canada
Shipping Act 2001.[212]
Foreign-flag vessels may be used in Canadian coasting trade
under waiver if no Canadian-flag vessels are available. In 2006, foreign flag
vessels operating under waiver carried about 2.7 percent of all coasting-trade
traffic.[213]
While Canada’s protectionist policy has changed little, a
number of reviews have been conducted resulting in a substantial increase in
the scope of activities included in the definition of cabotage, and in the
geographic area to which it applies. In particular, Canada has chosen to:
- limit
cabotage access to Canadian (as opposed to Commonwealth) registered ships on
which all applicable duty has been paid
- extend
the area of application to the outer limits of the Canadian continental shelf,
or to 200 nautical miles, whichever is greater and
- expand
the definition of ‘coasting trade’ to include a range of additional activities
above and beyond transportation between two ports or places in Canada,
including, for example, cruising activities and activities related to the
exploration, exploitation and transportation of mineral or non-living natural
resources.[214]
European Union
With the move toward a single European market in the late 1980s,
more open access in maritime transport services was desired. The primary
instrument for the liberalisation of Europe’s cabotage policy was EEC
Regulation 3577/92, which came into force on 1 January 1992.[215]
The principal provision in this regulation was that:
... freedom to provide maritime transport services within a
Member State (maritime cabotage) shall apply to Community shipowners who have
their ships registered in, and flying the flag of, a Member State, provided
that these ships comply with all conditions for carrying out cabotage in that
Member State.[216]
Also contained in this regulation were statements of policy
intent, including the goal of ‘liberalisation of maritime cabotage’, ‘abolition
of restriction on the provision of maritime transport’, as well as freedom for
all members to provide marine transport services.[217]
In Europe an EU-ship is therefore eligible to participate in
the cabotage trades of any other EU state. Within Europe, each country can
impose crew nationality requirements, vessel ownership requirements and fiscal
requirements on owners. In addition, states that retain some restriction on
access for foreign vessels usually maintain a waiver system based on the
condition of non-availability or unsuitability of a national- or EU-flag ship.[218]
Cabotage policy differences of individual European states are discussed in more
detail below.
Individual European states
EEC Regulation 3577/92—later extended to the European Free
Trade Association, thereby applying it throughout the European Economic Area
(EEA)—called for access to national cabotage for all member states as a minimum
requirement. However, the question of whether or not cabotage trades should be
further opened to foreign (non-EEA) ships has been left to the discretion of
each state. In practice, Belgium, Denmark, Ireland, Netherlands, United
Kingdom, Iceland and Norway have chosen not to place any restrictions on
foreign flag access. Of these countries, only the UK and Norway have
significant cabotage tonnage, both in cargo and passengers. In states where
there are restrictions on foreign (non-EEA) vessels, the restrictions can take
a variety of forms. For example, France, Germany and Greece prohibit the use of
foreign-flag vessels except under a waiver system. Italy restricts cabotage to
EEA-flag shipping and lays down ‘host state’ rules for EEA ship crews. Portugal
also applies restrictions and sets ‘host state’ rules for island cabotage.[219]
In terms of crew nationality requirements, most EEA states
require the ship’s master to be of the nationality of that state, with some
extending the requirement to certain other officers–for example, France, Italy,
Spain and Portugal require the first officer to be a national as well. In
certain circumstances there is a waiver system, but in Sweden and Greece (for
example) there is no flexibility in this requirement regarding the ship’s
master. For crews the normal requirement for first registers is that the crew
be citizens of EEA states.[220]
In terms of vessel ownership requirements, most states
require that the ship be owned by an EEA citizen or by a company having its
registered office in an EEA state. In Denmark, for example, there is also a
requirement that the management of the ship be located in the host state.[221]
The fiscal regime that is applicable to a ship engaged in
European maritime cabotage is set by the state in which the ship is registered.
The principal fiscal elements provided include corporate tax relief in various
forms (but increasingly in the form of a low-rate tonnage tax) and a
significant degree of tax relief for crews on income and social security
benefits, normally related to the amount of time that a ship spends in
international trading. To illustrate, in the UK ship operators may choose a
‘tonnage tax’ fiscal regime, and seafarers are exempt from income tax if they
are engaged on a ship in international trades (and therefore not resident in
the UK) for more than 183 days per year.[222]
United States
The US domestic maritime industry is protected under section
27 of the US Merchant Marine Act of 1920 (commonly referred to as the Jones
Act).[223]
The Jones Act requires that cargo transported between two US ports be
carried by vessels owned by citizens of the US, be built and registered in the
US and be manned by a crew of US nationals. Foreign financial owners are
permitted to fund Jones Act assets provided they derive the majority of
their revenues from financing activities other than vessel operations.[224]
U.S. Customs and Border Protection has direct responsibility for enforcing the Jones
Act and may grant waivers of the US-flag, US-build or US‑ownership
requirements, but only in the interest of national defence.[225]
The argument made in support of cabotage in the US is one of
strategic interest. The American Maritime Congress states that:
The Jones Act and other cabotage laws, which include
laws regarding passenger vessels, dredging and salvage, ensure that the United
States has the vessels, seafarers and shipyards necessary to protect the
national and economic security of the country.[226]
If security is its strategic interest, however, then this is
not reflected in the ocean-going US domestic fleet, which has been undergoing
continuous decline over several years. Between 1996 and 2007, the number of
ships engaged in ocean-going US origin to US destination trades has fallen from
291 to 100.[227]
There is abundant evidence that the Jones Act harms
business and the US economy by creating expensive barriers to trade. In 1995, a
report from the US International Trade Commission found that the Jones Act
costs the economy $2.8 billion annually and its removal would lower domestic
shipping prices by 26 per cent. Particularly hard hit by the Jones Act
are non-contiguous US territories and states, such as Hawaii, Puerto Rico and
Guam. With few alternative means of transporting goods other than by sea, the
impact on the cost of living and the cost of doing business in these areas can
be significant.[228]
The US cabotage regime is perhaps the most restrictive of
any nation. While efforts have been made to reform or repeal the Jones Act,
these have so far been unsuccessful.[229]
New Zealand
New Zealand lies at the more liberalised end of the cabotage
regime.[230]
The provisions governing maritime cabotage are laid out in section 198 of the
Maritime Transport Act 1994.[231]
Coastal shipping is protected but only in the sense that no ship is
permitted to carry coastal cargo unless it is a NZ-flag ship or a foreign ship that
has either loaded or unloaded international cargo or passengers at a port in
NZ, or will be doing so before departing from such a port. There is no
ministerial discretion with this provision; however, the minister may authorise
the carriage of coastal cargo by ‘any other ship’ under such conditions as the
minister considers appropriate. Overall, coastal shipping control is not
economically highly significant for NZ, and its administration is comparatively
straightforward.[232]
In 2000 the government implemented a review of the NZ
shipping industry. The main finding of the review was that the NZ shipping
industry was at a serious competitive disadvantage on coastal routes opened up
to international operators by the implementation of section 198 of the Maritime
Transport Act 1994. While one of the options for increasing NZ
participation in shipping would be reintroduction of a cabotage regime, a
report commissioned by the review found that such a move would increase
domestic and international freight costs by an estimated NZ$13.1 million. The
review strongly recommended that special tax incentives and/or a shipowner‑friendly
tonnage tax be implemented in NZ in order to create a ‘level ocean’ for local
shipping operators.[233]
The oil spill caused when the cargo ship Rena struck
a reef off the coast of NZ in 2011 has prompted calls for the reintroduction of
cabotage in NZ to ensure appropriate safety and environmental protection.[234]
Japan
Japan has a closed cabotage regime.[235]
Under relevant Japanese legislation, access to coastal shipping of cargo or
passengers between ports in Japan is limited to Japanese vessels, with the
exception of vessels from a limited number of countries which have been granted
restricted access pursuant to treaties of friendship, commerce or navigation
with Japan, or which have obtained a permit from the Ministry of Land,
Infrastructure, Transport and Tourism.[236]
The reasons for these maritime restrictions are:
-
To maintain national security.
Because Japan is a maritime country its national security
depends heavily on coastal shipping. If its shipping capacities were to decline
or become severely limited, this would jeopardise the strength and security of
the nation.
-
To ensure the safe and reliable transport of everyday goods for
local residents.
Japanese waters are subject to extreme weather changes and
the majority of navigation must be conducted within heavily trafficked sea
lanes. If this were to be undertaken by foreign crews then Japanese coastal
areas could become inordinately dangerous.
-
To secure the employment of domestic crew members.
If the transportation of goods were to become more dependent
on foreign-flag ships and foreign crews, many local shipowners and transport
operators would be forced to withdraw from the profession making it more
difficult for Japan to pass on its marine technical tradition.[237]
China
Foreign vessels are not permitted to engage in coastal
shipping in China. In recent years some ports and shipping companies have made
appeals to open coastal shipping to foreign vessels, claiming that restrictions
impede the development of the port industry in China. The Chinese Ministry of
Transport (MOT), however, has responded by saying that at present it is not
appropriate to open the cabotage business to foreign vessels. MOT argues that
maintaining strict controls on cabotage is necessary for the economic interest
of the country, as well as the sovereignty and safety of the country. Relaxing
restrictions would impact on the development of the domestic shipping industry
and the status of Hong Kong as an international shipping centre. At the same
time, it would adversely affect the development of small- and medium-sized
ports in China.[238]
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Coastal Trading
(Revitalising Australian Shipping) Act 2012, accessed 19 November 2015.
[2]. Much
of the information for this table was taken from: Australian Shipowners
Association, Submission to Department of Infrastructure and
Regional Development (DIRD), Approaches to regulating coastal shipping
in Australia: options paper, June 2014, p. 15, accessed 30 September 2015.
[3]. The
material in relation to Canada was also drawn from: JRF Hodgson and M Brooks, Canada’s
maritime cabotage policy, Dalhousie University, Halifax, Nova Scotia, 2004,
p. 78, accessed 17 October 2015; M Brooks, Liberalization
in maritime transport, Forum paper 2009–2, International Transport Forum,
OECD, Paris, 2009, p. 11, accessed 20 October 2015.
[4]. The
material in relation to the EU was also drawn from: M Brooks, op. cit., pp.
9-10, 12-13; JRF Hodgson and M Brooks, op. cit., pp. 51-52, 54‑56.
[5]. The
material in relation to the US was also drawn from: US Merchant Marine
Act of 1920; M Brooks, op. cit., pp. 12–13; United States
Maritime Administration, US Department of Transportation, ‘US-flag
waterborne domestic trade and related programs’, US Department of
Transportation website, accessed 21 October 2015; American Maritime Congress, The
Jones Act—the foundation of the merchant marine, Issue briefing,
American Maritime Congress, Washington, DC, accessed 21 October 2015; M Blom
Hill, The
sinking ship of cabotage: how the Jones Act lets unions and a few companies
hold the economy hostage, Capital Research Centre, April 2013, accessed
21 October 2015.
[6]. The
material in relation to New Zealand was also drawn from: M Brooks, op. cit., p.
8; JRF Hodgson and M Brooks, op. cit., pp 59–60; P Myburgh, ‘Shipping
law’, pp. 1–2, New Zealand Law Review, (2001) , pp. 105-123, p. 1-2,
accessed 12 November 2015; Australian Shipowners Association, Submission
to Department of Infrastructure and Regional Development (DIRD), Approaches
to regulating coastal shipping in Australia: options paper,
op. cit.
[7]. The
material in relation to Japan was also drawn from: G llanto and A Navarro,
Relaxing the cabotage restrictions in maritime transport, Philippine Institute
for Development Studies, Manila, Philippines, 2014, p. 6, accessed 22 October
2015; The Japan Federation of Coastal Shipping Associations, ‘Adherence to the
cabotage system’, Japan Federation of Coastal Shipping Associations website,
2011, accessed 21 October 2015.
[8]. Hai
Tong & Partners, ‘China
will not open its cabotage to foreign vessels’, Hai Tong Partners website,
7 May 2010, accessed 22 October 2015.
[9]. W
Truss, ‘Second
reading speech: Shipping Legislation Amendment Bill 2015’, House of
Representatives, Debates, 25 June 2015, p. 7576, accessed 15 July 2015.
[10]. Senator
C Back (Senator for Western Australia, Liberal Party), Question in Senate Rural and Regional Affairs
and Transport Legislation Committee, Inquiry into the Shipping Legislation
Amendment Bill 2015 [Provisions], Senate, 7 September 2015, p. 5, accessed
5 November 2015: ‘Over the first two years of the current legislation
there has been a 63 per cent decline in the carrying capacity of the major
Australian coastal trading fleet.’
Senate Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], The Senate, Canberra, 12
October 2015, paras 3.8–3.9, pp. 12–13, accessed 12 October 2015.
[11]. L
Nielson and M Brennan, Coastal
Trading (Revitalising Australian Shipping) Bill 2012 [and] Coastal Trading
(Revitalising Australian Shipping) (Consequential Amendments and Transitional
Provisions) Bill 2012, Bills digest, 151, 2011–12, Parliamentary
Library, Canberra, 2012; and L Nielson and M Brennan, Shipping
Reform (Tax Incentives) Bill 2012 [and] Tax Laws Amendment (Shipping Reform)
Bill 2012, Bills digest, 146, 2011–12, Parliamentary Library, Canberra,
2012, both accessed 13 July 2015.
[12]. Parliament
of Australia, ‘Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill
2015 homepage’, Australian Parliament website,
accessed 14 July 2015.
[13]. L
Nielson and M Brennan, Shipping Reform, Bills digest, op. cit., p. 3.
[14]. A
Albanese, ‘Second
reading speech: Coastal Trading (Revitalising Australian Shipping) Bill 2012’,
House of Representatives, Debates, 22 March 2012, p. 3935, accessed
14 July 2015.
[15]. L
Nielson and M Brennan, Shipping Reform, Bills digest, op. cit., p. 10.
[16]. Coastal Trading
(Revitalising Australian Shipping) Act 2012, section 2.
[17]. The
Nationals, Our
plan for regional Australia, National policy document, Election 2013,
p. 102, accessed 16 October 2015.
[18]. Liberal
Party of Australia and the Nationals, The
Coalition’s discussion paper on building a strong, prosperous Tasmania,
Coalition policy document, issued May 2013, p. 16, accessed 16 October 2015.
[19]. DIRD,
Options
Paper: Approaches to regulating coastal shipping in Australia (Options
Paper), DIRD, Canberra, April 2014, accessed 14 July 2015.
[20]. Ibid.,
Annex 1: Australian maritime activity, p. 21.
[21]. Ibid.,
p. 3.
[22]. Ibid.
[23]. Ibid.,
p. 4.
[24]. Ibid.
[25]. Explanatory
Memorandum, Shipping Legislation Amendment Bill 2015, p. 58, accessed 30
September 2015.
[26]. Competition and Consumer
Act 2010, accessed 19 November 2015.
[27]. I
Harper, Competition
policy review (Harper Review), report prepared for the Competition
Policy Review Panel, Treasury, Canberra, March 2015, recommendations 4 and
5, pp. 39–40.
[28]. W Truss, ‘Second
reading speech: Shipping Legislation Amendment Bill 2015’, House of
Representatives, Debates, op. cit.: ‘The current
arrangements are self-defeating for the shipping industry, let alone our
industries and manufacturers reliant on coastal shipping services. The extra
cost for Australian businesses using an Australian vessel is unsustainable at some
$5 million a year more than using a foreign vessel. More affordable freight
means more freight, more efficient services and more competition, all of which
will make Australian products more competitive internationally and
domestically, helping local industries, which employ thousands of Australians,
and providing the opportunity for economic growth and expansion.’
[29]. Senate Rural and Regional Affairs and Transport Legislation
Committee, ‘Inquiry into the Shipping Legislation Amendment Bill 2015
[Provisions]’, Senate, Canberra, 25 June 2015,
accessed 12 November 2015.
[30]. Senate
Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 12
October 2015, para 3.74, p. 30, accessed 12 October 2015.
[31]. Ibid., p. 32.
[32]. See:
Australian Greens, Dissenting
Report, Senate Rural and Regional Affairs and Transport Legislation
Committee, Inquiry into the Shipping Legislation Amendment Bill 2015
[Provisions], The Senate, Canberra, 12 October 2015;
Australian Labor Party, Dissenting
Report, Senate Rural and Regional Affairs and Transport Legislation
Committee, Inquiry into the Shipping Legislation Amendment Bill 2015
[Provisions], The Senate, Canberra, 12 October 2015.
[33]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 7, 2015, Senate, Canberra, 12 August 2015, p. 38, accessed 12 October 2015.
[34]. Parliamentary
Joint Committee on Human Rights (PJCHR), Twenty-seventh
report of the 44th Parliament, 8 September 2015, p. 16, accessed 28 October
2015.
[35]. Ibid.,
paras 1.73–1.74, pp. 16–17.
[36]. Ibid.,
para 1.73, p. 16.
[37]. Ibid.,
para 1.76, p. 17.
[38]. Ibid.,
para 1.77, p. 17.
[39]. Ibid.,
paras 1.79–1.80, pp. 17–18.
[40]. PJCHR,
Twenty-seventh report of the 44th Parliament, op. cit., para 1.8, p. 18.
[41]. Ibid.,
para 1.83, p. 18.
[42]. Ibid.,
para 1.83, pp. 18–19.
[43]. W Truss, ‘Second
reading speech: Shipping Legislation Amendment Bill 2015’, House of
Representatives, Debates, op. cit.: ‘More affordable
freight means more freight, more efficient services and more competition, all
of which will make Australian products more competitive internationally and
domestically, helping local industries, which employ thousands of Australians,
and providing the opportunity for economic growth and expansion.’
[44]. A Albanese, ‘Private Members' Business: Coastal Shipping’, Federation Chamber, House of Representatives, Debates, 1
December 2014, p. 13797, accessed 15 July 2015. One meaning of cabotage is
restricting of the operation of transport services within a particular country
to that country’s own transport services. As a result, the reference to ‘some
form of cabotage’ is a reference to some form of restriction on foreign
competition in coastal shipping.
[45]. Fair
Work Commission (FWC), Seagoing
Industry Award 2010 [MA000122], FWC, 18 June 2015.
[46]. A Albanese, ‘Private Members' Business: Coastal
Shipping’, op. cit.
[47]. Ibid.
[48]. P
van Onselen, ‘Interview
with Anthony Albanese’, Australian Agenda, transcript, Sky News, 7
June 2015, accessed 16 July 2015.
[49]. A
Albanese, Abetz must stand up for Australian shipping, media release, 9 July 2015, accessed 16 July 2015.
[50]. A
Wilkie, ‘Private
Members’ Business: Coastal Shipping’, Federation Chamber,
House of Representatives, Debates, 1 December 2014, p. 13794, accessed 15 July 2015.
[51]. Department
of Infrastructure and Regional Development (DIRD), ‘Coastal
trading, public submissions’, DIRD website, 18 March 2015, accessed 12
November 2015.
[52]. Australian
Peak Shippers Association (APSA), Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, 8 May 2014,
accessed 16 July 2015.
[53]. National
Farmers’ Federation, (NFF), Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, 30 May
2014, accessed 16 July 2015.
[54]. Australian
Food and Grocery Council, Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, 16 June
2014, accessed 16 July 2015;
Minerals Council of Australia (MCA), Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 21 August 2015,
p. 7. The MCA submitted that removing ‘...all regulation of access to Coastal
Trading and enact[ing] legislation to deal with the effects of other Australian
laws’ was ‘most likely to enhance business productivity and economic growth’.
[55]. Maersk
Line, Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, 14 May
2014, accessed 16 July 2015.
[56]. CSL
Australia, Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, 14 May
2014, accessed 16 July 2015.
[57]. CSL Australia, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, August 2015,
p. 2.
[58]. Freight
and Logistics Council of WA, Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, 30 May
2014, accessed 16 July 2015.
[59]. North
Star Cruises Australia, Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, May 2014,
accessed 16 July 2015.
[60]. Coral
Princess Cruises, Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, 27 May
2014, accessed 16 July 2015.
[61]. Australian
Expedition Cruise Shipping Association, Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, 28 May
2014, accessed 16 July 2015.
[62]. South
Australian Tourism Commission, Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, 28 May 2014,
accessed 16 July 2015.
[63]. Australian
Maritime College, Submission to DIRD, Approaches to
regulating coastal shipping in Australia: options paper, 28 May 2014,
accessed 16 July 2015.
[64]. Maritime
Union of Australia (MUA), Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, August 2015,
p. 2;
Australian Maritime Officers Union (AMOU), Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, August 2015,
p. 2;
Australian Institute of Marine and Power Engineers (AIMPE), Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, August 2015,
p. 3,
all accessed 6 November 2015.
[65]. MUA,
Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit., p. 2.
[66]. AMOU,
Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit., p. 2.
[67]. AIMPE),
Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit., p. 3
[68]. Explanatory
Memorandum, Shipping Legislation Amendment Bill 2015, p. 2, accessed 16
July 2015.
[69]. The
Statement of Compatibility with Human Rights can be found at pp. 3–6 of the
Explanatory Memorandum to the Bill.
[70]. Coastal Trading
(Revitalising Australian Shipping) Act 2012, accessed 19 November 2015.
[71]. Senate
Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 12 October
2015, para 2.2, p. 3, accessed 12 October 2015.
[72]. CSL
Australia Pty Limited v Minister for Infrastructure and Transport [2014] FCAFC
10, accessed 12 November 2015.
[73]. Senate
Rural and Regional Affairs and Transport Legislation Committee, op. cit., para
2.3, p. 3.
[74]. A
vessel that offloads passengers or cargo in the same state or territory in
which they were loaded will only be considered to be involved in ‘coastal
trading’ if the Minister declares that the Act applies to that vessel – see
subsection 12(2) of the Act.
[75]. The
exceptions are provided in subsection 7(2) of the Coastal Trading
(Revitalising Australian Shipping) Act 2012 and include where a
passenger who holds a through ticket to or from a port outside Australia
disembarks at a port in Australia for transit purposes only, or to cargo that
is consigned on a through bill of lading to or from a port outside Australia
and is unloaded at a port in Australia for transshipment purposes only or kinds
of passengers (or cargo) prescribed by the regulations.
[76]. Coastal Trading
(Revitalising Australian Shipping) Act 2012, see subsections 3(1), (2),
6(1) and sections 5, 7, 8, 10 and 12. The effect of these provisions is that
where a person engages in the activity of ‘coastal trading’, they are captured
by the Act, regardless of whether the relevant voyage was commenced inside or
outside of Australia’s territorial waters, Exclusive Economic Zone (EEZ), the
Australian continental shelf or Australia’s external territories.
[77]. Shipping
Legislation Amendment Bill 2015, items 7, 8 and 23–25.
[78]. Item
9 will amend subsection 6(1) of the Coastal Trading (Revitalising
Australian Shipping) Act 2012 to provide that a vessel is ‘docked for
service’ when it is in dry dock or docked for maintenance, repairs, cleaning or
painting and not engaged on a voyage.
[79]. Section
11 of the Coastal Trading (Revitalising Australian Shipping) Act 2012 allows
the Minister to exempt certain vessels from the operation of that Act. The Coastal Trading
(Revitalising Australian Shipping) Act 2012 - Section 11 exemption for cruise
vessels (a legislative instrument made under section 11 of that Act)
currently exempts vessels in excess of 5,000 gross tonnes which are: (a)
capable of a speed of at least 15 knots, (b) capable of carrying at least
100 passengers and (c) utilised wholly or primarily for the carriage of
passengers between any ports in the Commonwealth or in the Territories, except
between Victoria and Tasmania. As such, it exempts most cruise ships from the
licencing regime created by that Act. Section 11 will be repealed by item 28
of Schedule 1 to the Bill.
[80]. Senate
Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit., para 3.65, pp.
28–29.
[81]. Ibid.,
para 3.66, p. 29.
[82]. Cruise Lines International Association Australasia, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, August 2015,
pp. 3–4.
[83]. Senate
Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit., 3.68–3.71, pp.
29–30.
[84]. Ibid.,
paras 3.72–3.73, p. 30.
[85]. Navigation Act 1912
(as amended, taking into account amendments up to Act No. 144 of 2008), subsection
286(3): ‘A permit issued under this section may be for a single voyage only, or
may be a continuing permit’.
[86]. Navigation
Act 1912, subsection 288(3) and section 289.
[87]. Ibid.,
section 286.
[88]. Ibid.,
subsection 286(2): ‘The carriage, by the ship named in a permit issued under
this section, of passengers or cargo to or from any port, or between any ports,
specified in the permit shall not be deemed engaging in the coasting trade.’
(emphasis added); subsection 289(1): ‘Every seaman employed on a ship engaged
in any part of the coasting trade shall... be paid, for the period during
which the ship is so engaged, wages at the current rates ruling in Australia...’
(emphasis added).
[89]. See:
Fair Work Act 2009,
subjections 33(1) and 33(3); Fair Work Regulations 2009
(as amended, taking into account amendments up to SLI 2009 No. 164); Regulation
1.15D (Regulation 1.15E commenced on 1 January 2010). As noted in the
Explanatory Statement for the Fair Work Legislation Amendment Regulations 2009
(No.2) the effect of regulation 1.15E was to extend the application of the FWA
to all ‘vessels, whether or not crew members and their employers are Australian’:
Explanatory
Statement, Fair Work Legislation Amendment Regulations 2009 (No. 2), p. 7,
accessed 27 August 2015.
[90]. Fair Work Regulations 2009
(as amended by the Fair Work Legislation Amendment Regulations 2009 (No. 2)),
regulations 1.15D and 1.15E.
[91]. The
reforms also created a transitional general licence (which was only applicable
to foreign ships registered under the previous system and featured a
statutorily-imposed expiration date), but this is not examined in this digest.
[92]. Coastal
Trading (Revitalising Australian Shipping) Act 2012, section 13
[93]. Coastal Trading
(Revitalising Australian Shipping) (Consequential Amendments and Transitional
Provisions) Act 2012, Schedule 2, Part 3.
[94]. Coastal
Trading (Revitalising Australian Shipping) Act 2012, sections 21 and 27.
[95]. Ibid.,
subsection 16(1).
[96]. Ibid.,
paragraph 40(a) and subsection 28(1).
[97]. Ibid.,
paragraph 35(1)(a).
[98]. Fair Work Regulations 2009, Regulation 1.15E(1): ‘For subsection 33(3) of the
Act, the Act is extended to and in relation to each of the following ships in
the exclusive economic zone or the waters above the continental shelf... a temporary
licensed ship’.
[99]. Coastal
Trading (Revitalising Australian Shipping) Act 2012, subsection 28(2).
[100]. Coastal
Trading (Revitalising Australian Shipping) Act 2012, sections 30–34.
[101]. Ibid.,
subsection 32(2).
[102]. Ibid.,
subsection 34(3).
[103]. Ibid.,
subsection 67(1).
[104]. Ibid.,
paragraph 72(a).
[105]. Ibid.,
paragraph 64(2)(b)(i); Coastal
Trading (Revitalising Australian Shipping) Regulation 2012, regulation
4.3.1.
[106]. Fair Work Regulations 2009, Regulation 1.15E(1): ‘For subsection 33(3) of the
Act, the Act is extended to and in relation to each of the following ships in
the exclusive economic zone or the waters above the continental shelf... an
emergency licensed ship'.
[107]. Coastal
Trading (Revitalising Australian Shipping) Act 2012, subsection 75(1).
[108]. Ibid.,
sections 30 and 31.
[109]. Explanatory
Memorandum, Shipping Legislation Amendment Bill 2015, Regulation Impact
Statement, p. xliv, accessed 8 October 2015.
[110]. Navigation
Act 1912, subsection 288(3), section 289.
[111]. Ibid.,
subsections 286(2) and 289(1).
[112]. Ibid.
[113]. Coastal
Trading (Revitalising Australian Shipping Act) 2012, paragraph 13(2)(b);
Fair Work Regulations 2009, regulation 1.15C, paragraphs 1.15D(b) and 1.15E(b);
Seagoing
Industry Award 2010 (the Award), Part A: ‘The following provisions... apply
to all vessels except those which have been granted a temporary licence
under the Coastal Trading (Revitalising Australian Shipping) Act 2012
(Cth)’ (emphasis added).
[114]. Subsection
28(2) of the Coastal Trading (Revitalising Australian Shipping Act) 2012
provides that an application for a temporary licence must (amongst other
things) specify ‘the number of voyages, which must be 5 or more, to be
authorised by the licence’ (emphasis added). The combined effect of regulations
1.15B (definition of temporary licenced ship), 1.15D (modification of
application of the Fair Work Act 2009) of the Fair Work Regulations 2009
and Part B of the Award mean that, in the normal course of events, a ship
issued with a temporary licence must pay the Australian wages specified in Part
B of the Award. This is because to be issued with a temporary licence it must
nominate at least five voyages, and the requirement to pay Australian wages is
trigged once a third voyage is commenced within a 12 month period. Whilst it is
theoretically possible that a ship could apply for a temporary licence and only
undertake two voyages in a 12 month period (and hence not be required to pay
Australian wages), this appears unlikely to occur on a regular basis.
[115]. As
per sources cited above at fn 113.
[116]. Fair
Work Act 2009, sections 12 (definition of Australian ship), 35 (definition
of Australian employer and Australian based employee) and 33–34 (application of
the Fair Work Act 2009 to Australian ships); Shipping Registration
Act 1981, section 29 (links to definition of Australian ship mentioned
above);
DIRD, Submission
to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry
into the Shipping Legislation Amendment Bill 2015 [Provisions], 19 August
2015, p. 13 [para 40]: ‘Part A [of the Seagoing Industry Award 2010] will
remain for Australian ships on the Australian General Shipping Register’ and p.
14 [para 44]: ‘The Fair Work Act and Part A of the Seagoing Industry Award will
continue to apply to ships on the Australian General Shipping Register.’; DIRD,
Options
Paper: Approaches to regulating coastal shipping in Australia (Options
Paper), op. cit.
[117]. Explanatory
Memorandum, Shipping Legislation Amendment Bill 2015, p. 3.
[118]. Proposed
subsections 22(2)–(4).
[119]. Proposed
subsections 22(2)–(4); proposed section 38. See also: Explanatory
Memorandum, Shipping
Legislation Amendment Bill 2015, pp. 16–17 and 23.
[120]. See:
Maritime Industry Australia Ltd, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 21 August 2015,
p. 10, accessed 12 October 2015: ‘The departure of Australian ships is linked
to closures or changed nature of operations of shore based operations such as
Alcoa’s Point Henry plant, Bluescope’s Westernport operations, Caltex’s Kurnell
refinery, and so on. It is overly simplistic and misleading to assert that
regulation of access to coastal freight drives these changes [increased costs]
in business structure when the shipping task is an ancillary element.
Furthermore, the Coastal Trading Act has not caused a freight rate hike in the
container sector, nor has it driven operators out of markets.’
[121]. C
Berg and A Lane, Coastal
shipping reform: industry saviour or regulatory nightmare?, report
prepared for the Institute of Public Affairs (IPA), December 2013, p. 2,
accessed 17 October 2014.
[122]. W
Truss, ‘Second
reading speech: Shipping Legislation Amendment Bill 2015’, op. cit.: ‘The extra cost for Australian businesses using an Australian vessel
is unsustainable at some $5 million a year more than using a foreign vessel.
More affordable freight means more freight, more efficient services and more
competition, all of which will make Australian products more competitive
internationally and domestically, helping local industries... and providing the
opportunity for economic growth and expansion.’
[123]. Dr
A Morehead (Group Manager, Workplace Relations Policy Group, Department of
Employment), Evidence
to Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry
into the Shipping Legislation Amendment Bill 2015 [Provisions], Senate, 7
September 2015, p. 54, accessed 5 November 2015.
[124]. Proposed
subsection 13(1). In relation to applications to transfer a permit see: proposed
subsection 25(1).
[125]. See:
Schedule 2, proposed section 15F of the Registration Act.
[126]. Senate
Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit., para 2.15, p.
5, accessed 12 October 2015: ‘Despite what appear to be generous tax
incentives, there are currently no ships registered on the AISR.’
[127]. Coastal Trading
(Revitalising Australian Shipping) Act 2012, subparagraph
13(1)(b)(i) (deals with general licence applications); paragraphs 28(1)(a)
(deals with temporary licence applications) and 64(1)(a) (deals with emergency
licence applications).
[128]. Ibid.,
subparagraph 13(1)(b)(ii); paragraphs, 28(1)(b) (deals with temporary licence
applications) and 64(1)(b) (deals with emergency licence applications).
[129]. H
Brasington, D Maybury and M Tang, ‘Coastal
shipping reform – Senate to consider the “blue highway”’, Norton Rose Fulbright website, July 2015,
accessed 6 October 2015.
[130]. Ibid.
[131]. In
relation to applications to transfer a permit see: proposed section 26.
[132]. See:
proposed paragraph 13(2)(c).
[133]. Proposed
subsections 13(2)–(4).
[134]. See
for example: Business Council of Australia, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 21 August 2015,
p. 5, accessed 12 October 2015.
[135]. See:
proposed section 38, subsections 13(3), 15(3)–(4), and
22(1)–(3)—discussed later in this Digest.
[136]. Ibid.
[137]. Coastal Trading
(Revitalising Australian Shipping) Act 2012, sections 30–34.
[138]. Senate
Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 12
October 2015, para 2.12, pp. 4–5, accessed 15 October 2015.
[139]. Explanatory
Memorandum, Shipping Legislation Amendment Bill 2015, Regulation Impact
Statement, p. 75, accessed 8 October 2015.
[140]. In
relation to applications to transfer a permit see: proposed section 27.
[141]. Proposed
subsection 15(5). In relation to applications to transfer a permit see: proposed
subsection 27(5)
[142]. In
relation to applications to transfer a permit see: proposed subsection 27(2).
[143]. CSL
Australia Pty Limited v Minister for Infrastructure and Transport [2014] FCAFC
10, accessed 12 November 2015.
[144]. Proposed
paragraph 15(3)(a). In relation to applications to transfer a permit see: proposed
paragraph 27(3)(a).
[145]. In
relation to applications to transfer a permit see: proposed paragraph
27(3)(b).
[146]. In
relation to applications to transfer a permit see: proposed paragraph
27(2)(e).
[147]. In
relation to applications to transfer a permit see: proposed subsection 27(4).
[148]. See
proposed section 18, which provides that only one coastal shipping
permit can be in force in relation to a vessel.
[149]. Proposed
paragraph 19(1)(a). In relation to applications to transfer a permit see: proposed
section 28.
[150]. Proposed
paragraph 19(1)(b).
[151]. Proposed
subsection 19(2). It is worth noting that transferred applications only
remain in force for the balance of the permit period.
[152]. In
relation to applications to transfer a permit see: proposed section 29.
[153]. In
relation to applications to transfer a permit see: proposed section 30.
[154]. Explanatory
Memorandum, Shipping Legislation Amendment Bill 2015, p. 17.
[155]. W
Truss, ‘Second
reading speech: Shipping Legislation Amendment Bill 2015’, op. cit.
[156]. In
relation to applications to transfer a permit see: proposed subsection 27(4).
[157]. Proposed
paragraph 15(3)(d).
[158]. Explanatory
Memorandum, Shipping Legislation Amendment Bill 2015, Regulation Impact
Statement, p. xliv, accessed 8 October 2015.
[159]. Ibid.,
p. 80.
[160]. Senate
Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit., para 3.15,
p. 15. See also pp. 5–6, 9.
[161]. Ibid.,
p. 16.
[162]. Ibid.,
para 3.21, pp. 16–17. See also pp. 19–20.
[163]. Ibid.,
para 3.39, p. 22.
[164]. Senate
Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit.,
pp. 13 and 74.
[165]. Section
4AA of the Crimes Act
1914 (Cth) provides that currently a penalty unit is $180.
[166]. See
proposed subsection 22(2) and (3).
[167]. Proposed
subsection 93(3).
[168]. Proposed
subsection 38(1).
[169]. Senate
Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit., p. 10.
[170]. Business
Council of Australia, Submission to Senate Rural and Regional Affairs
and Transport Legislation Committee, Inquiry into the Shipping Legislation
Amendment Bill 2015 [Provisions], Senate, Canberra, August 2015, p. 4,
accessed 12 October 2015.
[171]. National
Maritime Training Partnership, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 5 August 2015,
p. 1, accessed 12 October 2015.
[172]. Maritime
Industry Australia Ltd, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 21 August 2015,
p. 12, accessed 12 October 2015.
[173]. Maritime
Union of Australia, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 21 August 2015,
paras 1.3.2–1.3.2.1, p. 3, accessed 12 October 2015.
[174]. The
definition of ‘non-military ship’ contained in the Migration Regulations 1994,
regulation 1.03, encompasses foreign vessels engaged in commercial trade or the
carriage of passengers for reward. See also: Department of Immigration and
Border Protection (DIBP), ‘Maritime
Crew visa (subclass 988)’, DIBP website, accessed 3 November 2015: ‘The
Maritime Crew visa (subclass 988) is a temporary visa for crew who are employed
on non-military ships on international voyages to Australia... You cannot use
this visa to come to Australia and stay here. You cannot work in
Australia except for work that meets the normal operational requirements of
your ship.’ (emphasis added).
[175]. Section
4AA of the Crimes Act
1914 (Cth) provides that currently a penalty unit is $180.
[176]. Coastal Trading
(Revitalising Australian Shipping) Act 2012, see sections 61 and
62 (in relation to temporary licences) and 74A and 75 (in relation to emergency
licences).
[177]. Proposed
section 35.
[178]. Proposed
paragraph 36(1)(d)
[179]. Proposed
subsection 36(2).
[180]. Section
4AA of the Crimes Act
1914 (Cth) provides that currently a penalty unit is $180.
[181]. Regulatory Powers
(Standard Provisions) Act 2014, accessed 20 November 2015.
[182]. J
Murphy, Regulatory
Powers (Standard Provisions) Bill 2014, Bills digest, 73,
2013–14, Parliamentary Library, Canberra, 2014, accessed 6 November 2015.
[183]. Proposed
sections 84 and 85 respectively.
[184]. Explanatory
Memorandum, Regulatory Powers (Standard Provisions) Act 2014, p. 33,
accessed 12 October 2015.
[185]. Proposed
section 24.
[186]. Section
4AA of the Crimes Act
1914 (Cth) provides that currently a penalty unit is $180.
[187]. Proposed
section 2, table item 2.
[188]. Explanatory
Memorandum, Shipping Legislation Amendment Bill 2015, p. 31.
[189]. Maritime
Industry Australia Ltd, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 21 August 2015,
p. 12, accessed 12 October 2015.
[190]. Acts Interpretation Act
1901, subsection 15B(1).
[191]. For
an explanation of Australia’s maritime zones, including the territorial sea,
see Geoscience Australia, ‘Maritime
Boundary Definitions’, Geoscience Australia website, accessed 23 November
2015.
[192]. Section
15B of the Acts Interpretation Act 1901 provides that ‘A reference in an
Act to Australia... is taken to include a reference to the coastal sea of
Australia’ and ‘An Act is taken to have effect in, and in relation to, the
coastal sea of Australia as if that coastal sea were part of Australia’.
Section 35 of Fair Work Act 2009 (FWA) deals with application of
the FWA to ‘Australian employers’ and ‘Australian employees’, and hence
encompasses ‘Australian’ vessels (that is, those that are operated by an ‘Australian
employer’ or are operated by ‘Australian employees’.) In the case of foreign
vessels, the FWA would not normally apply as the (foreign) owner or
operator would not normally qualify as an ‘Australian employer’. Likewise, the
crew of a foreign vessel operating in Australia’s coastal waters are unlikely
to qualify as ‘Australian employees’ as their ‘primary place of work’ would
usually not be Australia, if it were not for the operation of section 32 of the
FWA and Regulation 1.15D of the Fair Work Regulations.
[193]. This
is because section 32 of the Fair Work Act 2009 allows regulations to
modify the application of that Act. Regulation 1.15D of the Fair Work
Regulations does that, by providing that the Fair Work Act 2009 does not
apply to vessels in Australia’s coastal waters other than those granted
various types of licenses under the Coastal Trading (Revitalising Australian
Shipping) Act 2012.
[194]. For
an explanation of Australia’s maritime zones, including the exclusive economic
zone and the continental shelf, see Geoscience Australia, ‘Maritime
Boundary Definitions’, Geoscience Australia website, accessed 23 November
2015.
[195]. Fair Work Act 2009,
paragraphs 33(1)(c) and (d).
[196]. Fair Work Regulations 2009,
Regulation 1.15E. Explanatory
Statement, Fair Work Amendment Regulation 2012 (No. 2), pp. 1 and 6,
accessed 15 October 2015.
[197]. W
Truss, ‘Second
reading speech: Shipping Legislation Amendment Bill 2015’, House of
Representatives, Debates, 25 June 2015, p. 7579, accessed 15 July 2015:
‘The bill ensures that if a foreign ship is predominantly operating in
Australia—that is, for more than 183 days of Australian coastal trading in a
12-month permit period—it will be subject to domestic workplace relations
arrangements. If a foreign ship engages predominantly in international
trading—that is, for less than 183 days of Australian coastal trading in a
12-month permit period—their existing on-board workplace arrangements will
apply.’
[198]. Australian
Industry Group, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 20 August 2015,
p. 5.
[199]. Ibid.
[200]. Shipping Registration
Act 1981, accessed 20 November 2015.
[201]. N
van der Reyden, G Vallely and N Lamart, ‘Australian
coastal trading update’, Holman Fenwick Willan website, 21 May 2015,
accessed 6 October 2015.
[202]. Senate
Rural and Regional Affairs and Transport Legislation Committee, Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit., para 2.15, p.
5, accessed 12 October 2015.
[203]. Ibid.,
citing Australian Shipping Consultants Pty Ltd, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 20 August 2015,
p. 4;
NFF, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], op. cit., p. 9, both
accessed 15 October 2015.
[204]. Ibid.
[205]. Shipping Registration
Act 1981, subsection 33A(1).
[206]. Maritime
Industry Australia Ltd, Submission to Senate Rural and Regional
Affairs and Transport Legislation Committee, Inquiry into the Shipping
Legislation Amendment Bill 2015 [Provisions], Senate, Canberra, 21 August 2015,
p. 12, accessed 12 October 2015.
[207]. Section
14 of the Shipping
Registration Act 1981 deals with what ships may be registered in the
General Register. Importantly, Australian‑owned ships and ships on a
demise character to Australian-based operators may be registered. No crewing
requirements as a condition of registration are imposed on such vessels – they
are only imposed on ‘small craft’.
[208]. Explanatory
Memorandum, Shipping Legislation Amendment Bill 2015, op. cit., p. 33.
[209]. Occupational Health and
Safety (Maritime Industry) Act 1993 and Seafarers Rehabilitation
and Compensation Act 1992, accessed 20 November 2015.
[210]. JRF
Hodgson and M Brooks, Canada’s
maritime cabotage policy, Dalhousie University, Halifax, Nova Scotia, 2004,
p. 78, accessed 17 October 2015.
[211]. Coasting
Trade Act 1992, S.C. 1992, c 31; Customs
Tariff, S.C. 1997, c 36, accessed 20 November
2015.
[212]. Canada
Shipping Act 2001, S.C. 2001, c 26; JRF Hodgson and M Brooks, Canada’s
maritime cabotage policy, Dalhousie University, Halifax, Nova Scotia, 2004,
p. 78, accessed 17 October 2015, p. 65.
[213]. M
Brooks, Liberalization
in maritime transport, Forum paper 2009–2, International Transport Forum,
OECD, Paris, 2009, p. 11, accessed 20 October 2015.
[214]. JRF
Hodgson and M Brooks, op. cit., p. 11.
[215]. M
Brooks, op. cit., p. 9.
[216]. JRF
Hodgson and M Brooks, op. cit., p. 51.
[217]. Ibid.,
p. 52.
[218]. M
Brooks, op. cit., p. 10.
[219]. JRF
Hodgson and M Brooks, op. cit., pp. 54–55.
[220]. Ibid.,
p. 55.
[221]. Ibid.,
p. 56.
[222]. Ibid.
[223]. Merchant Marine Act of
1920, 46 USC, accessed 12 November 2015.
[224]. M
Brooks, op. cit., pp. 12–13.
[225]. United
States Maritime Administration, US Department of Transportation, ‘US-flag
waterborne domestic trade and related programs’, US Department of
Transportation website, accessed 21 October 2015.
[226]. American
Maritime Congress, The
Jones Act—the foundation of the merchant marine, Issue briefing,
American Maritime Congress, Washington, DC, accessed 21 October 2015.
[227]. M
Brooks, op. cit., p. 13.
[228]. M
Blom Hill, The
sinking ship of cabotage: how the Jones Act lets unions and a few companies
hold the economy hostage, Capital Research Centre, April 2013, accessed
21 October 2015.
[229]. Ibid.
[230]. M
Brooks, op. cit., p. 8.
[231]. Maritime
Transport Act 1994 (NZ), accessed 12 November 2015.
[232]. JRF
Hodgson and M Brooks, op. cit., pp 59–60.
[233]. P
Myburgh, ‘Shipping
law’, pp. 1–2, New Zealand Law Review, (2001), pp. 105-123, p. 1-2,
accessed 12 November 2015.
[234]. Australian
Shipowners Association, Submission to Department of Infrastructure and
Regional Development (DIRD), Approaches to regulating coastal shipping
in Australia: options paper, op. cit., p. 15.
[235]. G
llanto and A Navarro, Relaxing
the cabotage restrictions in maritime transport, Philippine
Institute for Development Studies, Manila, Philippines, 2014, p. 7, accessed 22
October 2015.
[236]. The
Japan Federation of Coastal Shipping Associations, ‘Adherence to the
cabotage system’, Japan Federation of Coastal Shipping Associations
website, 2011, accessed 21 October 2015.
[237]. Ibid.
[238]. Hai
Tong & Partners, ‘China
will not open its cabotage to foreign vessels’, Hai Tong Partners website,
7 May 2010, accessed 22 October 2015.
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