Saturday 22nd Sep, 2018

INDUSTRY OPINION: Future-proofing the nation’s strategic maritime skills

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AN ISLAND nation with abundant export markets will always be reliant on shipping for trade and prosperity. This, in turn, makes the skills provided by the shipping industry of strategic importance; these skills provide the know-how required for a maritime nation to function.

As the world’s largest island nation, Australia needs maritime skills more than most other countries. From making sure trade flows through our ports without incident to ensuring we meet our international responsibilities as a country with one of the largest port state control tasks, the use, retention and development of maritime expertise is vitally important.

Australia exposes itself to great risk by relying solely on immigration to fill those maritime roles, given the global imbalance in supply and demand for quality seafarers. Training in the maritime industry requires a mix of classroom learning and practical experience – time at sea in a controlled environment – before being able to perform their role without supervision. In many cases the only way for seafarers to obtain the necessary sea time is via experience on board vessels of a certain size, as dictated by international convention.

Coastal education
In the Australian context, the vast majority of seafarer training has been undertaken by the domestic trading fleet. The decline in the domestic trading fleet has meant those historically carrying the training burden no longer employ or train seafarers. Yet, many others sectors such as ports, pilots and safety regulators still rely on these skills being available.

Increasing new entrant training (to watchkeeper level) may appear the simplest solution but is unlikely to assist the overall skilled seafarer pool if individuals are unable to find work once qualified or progress to more senior roles. The reduced fleet size also means fewer opportunities to transfer between shipping companies to gain promotion or additional experience. There is no point training people if they cannot find ongoing work.

Without platforms on which to work, the nation’s inability to locally recruit, train and develop the strategically important skills is now impacting workforce sustainability across the broader maritime sector, and will continue to do so.

What are the options?
Seafarer training in Australia has essentially ceased and is currently without any prospect of recovery without intervention. New opportunities for work and training of Australian seafarers must be secured if we wish to maintain a local skilled-seafarer capability.

The obvious options are:

  1. Look to the international industry to provide training and work opportunities for Australians;
  2. Refine existing policies to make Australian shipping businesses competitive and encourage them to invest in training for future growth; or
  3. Bypass the traditional route and train the shore-based skills from scratch (without seagoing experience).

Some progress has been made to adopt the path identified in number three above (notably the ab initio pilot-training program). It is likely part of the ongoing skills requirement will be filled via this path; however, the overwhelming sense within the sector is to retain seagoing experience as a core prerequisite for many shore-based roles.

For either option one or two to work is that Australian-resident seafarers must be able to accept employment at rates competitive with their international counterparts – most of whom are not subject to income tax in their home countries, which is reflected in their gross salaries. This requires positive policy settings to be established as well as the industry ensuring that a career in a seafaring profession, either at sea or on shore, is sufficiently attractive to attract and retain talent.

The answer is to make Australian resident seafarers competitive with their international colleagues by making all Australian seafarers’ income tax-exempt, even when working in Australia.

The rationale for extending the tax exemption to seafarers working in Australia as well as overseas is simply to avoid a perverse outcome. If we simply mirror the tax policies in other nations (that have seafarers tax exempt when working overseas), we will end up in a situation where international seafarers perform all work in Australia and Australian seafarers will only be affordable to employers if they work overseas. Facing that very real scenario, future polices to address the strategic skills shortage should ensure we don’t end up with such a nonsensical situation.

Looking to the global industry to ease training burden
In the absence of a local industry, one suggestion has always been utilising foreign ships to provide the necessary training berths for Australian trainees or cadets. Using foreign ships to gain sea-time is not as straight forward as it might seem. There is the issue as to whether the ships have room to take cadets – many companies, and countries, have their own training requirements and all training spaces are already filled.

The Maritime Labour Convention (MLC) adds additional complexity regarding the obligations of a shipowner vis-a-vis a seafarer. First and foremost, they must have a work agreement containing all the usual things you would find in a work contract including:

  • Rates of pay (note, under the MLC a seafarer must be paid);
  • Frequency of pay; and
  • Provisions for leave and other conditions etc.
Some countries are of the view that a cadet/trainee is not a seafarer and therefore not entitled to the protections of the MLC.

This is not the position of AMSA but is for some of the larger flags. It would be of some concern of Australian trainees/cadets where not entitled to these protections while gaining their sea-time on foreign ships.

In an increasing focus on employer responsibility, foreign shipowners may be reluctant to take responsibility for Australian cadets and trainees where there is uncertainty about legalities of the relationship (i.e. workers compensation, superannuation, application of laws). It should not be assumed that these cannot be overcome, merely that careful consideration of a range of factors should be given.

There are some ad-hoc examples of Australian trainees gaining sea time on foreign ships, and that is to be welcomed. However, there are some further technical employment issues that may have been overlooked. In some cases, for example, work agreements might not have been in place and workers compensation might have been provided via the educational provider. This is potentially a flawed arrangement based on the understanding that education providers can cover workers compensation where the industry time is a requirement for the qualification. For seafarers, industry time is a requirement for the Certificate of Competency issued by AMSA, but not generally for the qualification itself.

Additionally, crews are becoming smaller, there are shorter turnaround times in ports and increasing administrative burdens on senior crew. To ensure that sea time is actually providing quality experience, increasing the number of trainees on board any one ship is fraught. The key is for more ships to share the burden.

There are also wage differential considerations. Wage rates on offer internationally are relatively low in gross terms because they are based on seafarers not having to pay income tax in their home countries. Anecdotally, Australians that have accepted work at that pay rate have become non-residents for tax purposes. As a result, Australia loses the economic contribution of those individuals and their families.

The notion that cadets and trainees can easily find appropriate training placements on board foreign ships is perhaps over-simplified.

Build an Australian industry
Many nations offer attractive arrangements for shipowners to conduct businesses in their jurisdictions. This is in recognition of the economic reward that is available by having shipping form part of a national economy.

Shipping is a highly mobile business and shipowners will structure their business arrangements so as to maximise returns to their shareholders.

The measures established in 2012, including the advent of the Australian International Shipping Register (AISR), were designed to assist Australian businesses involved in shipping by levelling the playing field between Australian and international businesses.

Having ships on the AISR and having Australians employed on those ships creates an Australian presence, a capability on the water and a training ground for our nation’s skills requirement.

MIAL advocates further changes to provide a truly level playing field. Importantly, this includes changes to the scope of the AISR, including expanding those activities that are eligible, removing the requirement for time off the coast and implementing further amendments to the corporate and personal income tax settings. There are sound economic reasons to build a national shipping capability, not the least of which is to secure the maritime skills our nation so heavily relies upon.

* Teresa Lloyd is CEO of Maritime Industry Australia

This article appeared in the August edition of DCN Magazine

  • Miet Dlugolecki

    AISR was an idea designed to facilitate / combine some coastal shipping solutions and officers training , but the authors had no idea how convince local/foreign shipowners to use the register.
    As a result AISR is a “pub without beer”.
    Michael D’Lecki, Master Mariner





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