Red tape makes shipping to drought-stricken farmers impossible

RED TAPE is adding something like $60 a tonne to shipping costs within Australia, according to West Australian grain export company Premium Grain Handlers (PGH) director John Orr.

Used to shipping grain all over the world in what he says is an efficient process, Mr Orr is frustrated that those additional costs are preventing him from helping out drought-stricken farmers in South Australia and southern Victoria.

“But it's really frustrating when the cost of doing so is simply unviable. We might have competitive grain that would be valuable in the food industry in South Australia and Southern Victoria, but we can't get it there efficiently. We can't get it there cost effectively, and therefore we're struggling to help these people,” Mr Orr said.

“And that's a real frustration and something that should be a major concern in general because you know these are cost of living issues that all Australians suffer as a result of unnecessary costs.

“When we ship internationally, we can ship on international vessels, internationally flagged vessels. It's quite an efficient and cost-effective process. When we ship interstate, the shipping company needs to satisfy the coastal trading requirements.

“They need a special licence and must satisfy a number of different requirements before they're allowed to take on commercial cargo for interstate transport. Now that's an expensive process. And to put numbers around it, we can ship grain for food purposes to China at $60 a tonne lower cost than shipping it to Melbourne.

“It's a really sad situation. That $60 a tonne is just the ocean freight component. There's also the quarantine costs, and there's also container terminal booking fees that add to those costs. And it actually makes the idea that we might send product to help our friends out, unfortunately not cost effective.”

Mr Orr said he wasn’t hopeful that a review of the Coastal Trading Act review due this year would make any difference to the issue.

“We saw, for example, the Productivity Commission do a review of container terminal fees not long ago and made a number of recommendations to the government. None of the government ministers were prepared to take up those recommendations.

“We also saw the ACCC take up the issue of shipping costs in Australia, because it is a major concern to everyday Australians’ cost of living. And they also made a number of recommendations which the government completely ignored and this review will be ignored too because the government has no appetite to reform the Australian shipping regulations.”

Removing those additional costs would be a simple government decision according to Mr Orr.

“It’s simply red tape and unfortunately, while those conditions are there, as the climate becomes more volatile, we're going to continue to have big swings in food prices because one region in Australia is unable to cost-effectively assist another region in Australia. It's much easier for us to help friends internationally than it is for us to help friends at home.”

Mr Orr didn’t believe the expanded strategic fleet would make any difference to costs.

“It won't get used. What I'm saying is it's not viable to ship. It's not viable to use. Putting more assets, using taxpayers funds to put more assets on the water won't fix the fact that it's not viable.

“If I can't sell grain to my friends in South Australia no number of ships on the water is going to change that if the costs are too high. I'm not even booking the existing ones. Let alone the new ones they're talking about.

“Unfortunately, no one wants to deal with the real issue here and that is the cost of inefficiencies on our waterfront, we've got some, we've got oligopolies in our terminals and we've got regulations over interstate shipping all of which are government decisions and require reform.

“All you have to do is read the Productivity Commission's recommendations and follow them.”