Proposed reforms to Australian coastal shipping were introduced into Parliament by the Federal Government on 13 September 2017.

While not as far reaching as the Bill that was defeated in the Senate during 2015, the Coastal Trading (Revitalising Australian Shipping) Amendment Bill 2017 will deregulate the current failed system.

The Bill contains a number of administrative and streamlining changes, however the significant amendments are:

• Expanding the definition of coastal trading to include voyages between offshore facilities and Australian ports. The Bill’s Regulatory Impact Statement says the lack of coverage of coastal trading licences for oil and gas operators has resulted in shipments of liquid fuel being sent to international refineries instead of Australian refineries for processing;
• Removing a requirement that temporary licences have to be for a minimum of five voyages, allowing single voyages;
• Allowing temporary licence holders to carry up to 200 percent more in cargo and 100% less than authorised (as opposed to the current 20 percent); and
• Removing the need to consult general licence holders when it is known there are no relevant Australian ships.

Other changes include amending the definition of coastal trading to include voyages commencing and concluding at the same port and to vessels engaged in dry-docking.

Evidence of the state of the current dysfunctional and unsustainable Australian shipping industry is outlined in the Bill’s Regulatory Impact Statement.  The Regulatory Impact Statement states that no vessels have been placed on the Australian International Shipping Register in the five years it has been in place and the number of Australian flagged vessels with coastal licences has declined from 30 in 2006/07 to 14 nine years later.

The most damning statistic is that despite transport by sea being cheaper, coastal shipping only moved 15 percent of Australia’s domestic freight in 2014/15, down from 25 percent a decade earlier.

The Regulatory Impact Statement identifies that there is an oversupply of Australian seafarers and a lack of training berths on Australian vessels.  However, with an Australian crew costing around $4 million more per annum than an international foreign crew, it is not expected that these reforms will make it any more financially attractive for temporary licence holders to engage Australian crews.

The Federal opposition and MUA have both indicated they do not support the proposed changes and it is not yet known if they will receive the necessary cross bench support.

The details of the Coastal Trading (Revitalising Australian Shipping) Amendment Bill 2017 and Explanatory Memorandum can be accessed here.

Please contact the policy team at [email protected] if you would like further details or a more detailed briefing about these proposed reforms.