SWEEPING changes to the regulation of Australian-registered ships operating on international trade routes may open the door to more of Western Australia’s resources being carried by locally owned vessels.
The federal government last week announced a new international registration system which will allow Australian cargo vessels to operate tax free, in line with the most competitive shipping regimes in the world, including Singapore.
The policy also reframes many of the personal tax and industrial restrictions which made the employment of Australian seafarers unattractive.
While the changes are limited to international trade and have no impact on domestic shipping where costs remain high due, in part, to significant union activity, the shipping industry remains hopeful this is the start of a significant reform process to rescue the sector from extinction.
The militant Maritime Union of Australia, which represents some seafarers as well as dock workers, is seen as one of the key players in the wages explosion taking place in the offshore resources sector in the state’s north-west.
Despite the massive growth in international shipping, including the seaborne trade in minerals from the Pilbara, Australian-registered international trading vessels had declined to just 22 compared to 55 in 1996 – carrying just 0.5 per cent of our exports in ships which were significantly older and less efficient than the global average.
In WA, four of those ships are specialist LNG carriers operated by the North West Shelf. Rio Tinto has ships operating out of Queensland carrying bauxite to international customers.
After being stung by big shipping costs, there are unconfirmed reports that Fortescue Metals Group is looking at spending nearly $500 million to build as many as six ships capable of carrying 250,000 deadweight tonnes each.
FMG would not comment on the speculation but acknowledged that its Port Hedland operations were constrained by sailing times rather than ship sizes.
Australian Shipowners Association executive director Teresa Hatch said the new policy provided the opportunity for the nation’s ship owners to be competitive.
“More companies can consider their options about how they move their products,” Ms Hatch said.
Shipowners that agree to have their vessels registered as Australian for 10 years will have an effective tax rate of zero. There will also be tax concessions for Australians who spend three months or more on international voyages, removing a cost that was typically borne by the company.
The nationality of seafarers will be more flexible, with just two Australians required as part of a ship’s crew. Rates and conditions will also be more internationally competitive.
