Monday 19th Nov, 2018

COASTAL SHIPPING SPECIAL REPORT: Policy settings crucial to revitalise the coastal fleet

Change to current coastal shipping laws have to be the right changes, writes Teresa Lloyd*

THE need for certainty and stability of coastal shipping policy settings in Australia remains critical.

Do the current cabotage arrangements need to be changed? Yes, they do.

There are currently 50 vessels that hold a General Licence. That’s probably a lot more than anyone realised. But the detail is important. They are: eight vessels that work in/across Bass Strait; five dry bulk carriers; five expedition cruise vessels; one research vessel; 31 servicing northern Australia including a large number of landing barges. Suffice to say, the activity of these General Licence vessels is not preventing the presence of the foreign-flagged shipping in coastal trades.

However, it is recognised the process for obtaining a temporary licence to work on the coast can be a deterrent. There are simple fixes to maximise use of the blue highway and remove red-tape burdens.

These process improvements are clearly described in the green paper released in 2016 ( and would result in almost all voyages being undertaken with the bare minimum of paperwork and approvals. Most would not even require an application, far less a variation, under the proposals put forward. And, this is possible precisely because the vast majority of coastal shipping is undertaken by foreign ships.

Importantly, these changes can liberate the vast majority without destroying the fabric of the regime that offers fair and reasonable checks and balances for what is left of the Australian industry. Why hasn’t this already been done? Failure to progress change sits squarely with the proponents of the proposal put forward by the government.

MIAL has clearly identified the need for a radical change in the approvals process and yet the government proposal went nowhere near far enough in removing red tape for the voyages where there is no Australian ship (which is almost all voyages) and too far in terms of undermining the integrity of the regime in terms of tolerances for the few voyages where it does matter.

Coastal voyages by foreign ships could be free of application and variation processes today had the proposals been properly considered and drafted – and it is a great shame this is not the case. But all this is really tinkering at the edges. A desire for change beyond the paperwork and processes has been expressed continually for years by the full range of impacted stakeholders.

What is very apparent is that after all this time, there is no genuine desire for a solution because many parties involved remain unwilling to be pragmatic. The way forward cannot be to the benefit of only one party; there must be a way to accommodate all interests. Pragmatism is the only way.

Australia needs a clear vision to create a stable and sustainable coastal shipping policy. Such a vision needs to tackle the core questions:

  • What maritime capability does the country need?
  • How will it be provided?
  • Who is going to pay for it?

It is possible to design a regime that:

  • supports Australian businesses involved in providing shipping services;
  • provides users of shipping services with the service they need at a rate they can afford;
  • provides work for a strategic group of Australian maritime workers;
  • allows Australia to capitalise on the natural advantages it has to be a strong maritime nation with resultant benefits to the nation (economic and social)?

The government, as custodian of the national interest, can make this happen.

We need to think differently about how Australia can maximise the natural advantages we have to be a shipping nation, particularly how we see our coastal shipping task working. It is time to start looking at new options such as the use of mini-ports and short-sea shuttle services.

As to the calls for cabotage to be abolished, as it is a form of protectionism, I say, “show me nation that doesn’t protect its shipping industry”. The nations that provide the ships to carry international cargos all incentivise their industry – in many cases to an extreme extent. The effect is precisely the same as protectionism, or cargo reservation. One person’s incentive is another person’s subsidy. There is no such thing as a level playing field in shipping – everyone is protected somehow, it’s just a matter of how.

Tax breaks, international employment arrangements and other incentives go unremarked upon while cabotage or cargo reservation appear with flashing neon headlines. Australian shipping businesses don’t want cabotage necessarily, but they do want an equivalent to give them half a chance at competing with other nations that incentivise and/or subsidise their industry in their own country.

As contributors to the national economy and employers of Australians both on shore and at sea, it makes sound economic sense to ensure these businesses have that opportunity.

The opportunity still exists for Australia to choose what role we want our maritime industry generally, and coastal shipping sector in particular, to play. We are a maritime nation and we owe it to ourselves to retain some level of indigenous capability. To do this, we require strategic maritime skills to make our ports and blue highway workable and a few critical assets that can both train these people and be deployed as and when needed in the interests of Australian and its citizens.

The government can and should provide the vision and the environment to make this happen and the industry players can and should be pragmatic in their support.

* Teresa Lloyd is CEO of Maritime Industry Australia

This article appeared in the July edition of DCN Magazine

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